European high yield: a buoyant primary market

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Monthly European high yield bond issuance has reached its highest level since 2021. So far this year, almost €45 billion has been raised on the primary market. This is close to the total volume of issuance reached in 2023 (€47 billion) and almost twice the amount issued in 2022 (€25 billion).


Across Europe, high yield bond issuance was particularly slow in 2022 and 2023 amid rising interest rates and spreads. A very busy primary market in 2021 left high yield issuers with little need to refinance in the short term and coming to market would have meant locking-in high coupons during uncertain times.

A more supportive backdrop for high yield has materialised since the beginning of 2024: a brighter economic outlook, spreads below historical averages, encouraging default rate forecasts and a return to positive net inflows for the segment.

These elements form a window of opportunity for high yield issuers to refinance their upcoming maturities in favourable conditions. Several companies rated BB by credit agencies are refinancing bonds scheduled to mature in 2025, while some issuers rated B are anticipating maturities as far out as 2026. With the current backdrop enabling companies to calmly tackle their refinancing needs, the pace of annual issuance could return to levels last seen in 2019 and 2020.


Written on May 31, 2024. This is not an investment advice. Opinions subject to change.

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