The leveraged buyout (LBO) default cycle is ticking up even without the big push from the former TXU, though many private equity-backed companies will continue to win reprieves thanks to yield-hungry investors willing to help refinance debt for the time being.

The Energy Future Holdings (EFH) bankruptcy in April pushed both the junk bond and leveraged loan default rates to their highest points in several years. The trailing 12-month U.S. high yield default rate was moved to 2.8 percent and the U.S. leveraged loan railing 12-month default rated was pushed up to 3.9 percent. While this was a dramatic increase in the default rate, the market didn't register much of a shock, because the former TXU had been expected to file for Chapter 11 protection for years.

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