Low U.S. default rate fueling junk bond sales-Fitch

NEW YORK, April 17 (Reuters) - Record low default rates and favorable borrowing conditions are keeping "CCC"-rated junk bond sales robust, according to Fitch Ratings on Tuesday.

Bonds rated "CCC" or lower, which are rated seven or more levels below high grade debt, accounted for 18.4 percent of the $40.8 billion in high-yield bonds sold in the first quarter, according to Fitch. More than 40 percent of the $124 billion in "CCC" to "C"-rated bonds outstanding have come to market in the past two years, Fitch said.

"Essentially what we have is a self-sustaining pattern -- the ability of highly levered companies to tap the debt markets continues to depress default rates and very low default rates continue to support the issuance of low quality loans and bonds," Fitch analyst Mariarosa Verde wrote in a report released on Tuesday.

The trailing 12-month junk bond default rate fell to 0.4 percent in the first quarter, down from 0.8 percent for all of 2006. The long-term average annual default rate is 5 percent.

Default volume totaled $265 million in the first quarter, compared with $3.1 billion for the same period in 2006, Fitch said.