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Amid a robust economic recovery and strong financial market conditions, Fitch Ratings has dropped its forecast for defaults in the U.S. high-yield market.

The rating agency now expects the U.S. high-yield default rate to finish the year at 2%, down from its previous forecast of 3.5%.

“Enhanced liquidity and low near-term maturities due to favorable capital market access and government stimulus lowers the default risk for many companies that experienced sharply reduced cash flows during the pandemic,” said Eric Rosenthal, senior director of leveraged finance at Fitch, in a release.

“Operating conditions are also starting to improve due to the ramp-up in coronavirus vaccinations and the easing of restrictions,” he added.

In the retail sector for example, Fitch sees the default rate reaching just 1% this year.

Fitch also lowered its default forecast for the energy sector to 3% from 6% for 2021, “reflecting recovering crude oil prices and better capital market access.”

The rating agency reduced its default forecast for 2022 as well. It now sees defaults reaching the 2.5% to 3.5% range, down from its previous call of a 4% to 5% default rate next year.

So far this year, there have been just $4 billion in defaults, Fitch noted, and the trailing 12-month default rate is 3.6%, which is the lowest level since the pandemic hit in March 2020.