High Yield: European Securities Little Affected by the Crisis in Ukraine

Chart of the week

After reaching a particularly low level at the end of January 2022 (1.20%), the default rate for the European high yield universe (calculated over the last 12 months) rose to 2.12% at the end of February according to Moody’s data. In its baseline scenario with a one-year horizon, Moody’s expects a slight increase in the default rate, albeit within a limited range of between 1.8% and 3%.


The recent rebound is mainly linked to the simultaneous default of 8 Ukrainian banks, as Ukraine has imposed a moratorium on foreign currency payments. These bonds were previously rated B3 by Moody’s (High Yield universe).

However, there were no defaults in the euro-denominated high-yield corporate bond universe in February. In this market segment, the last payment incident observed was that of Intralot (a Greek company) in August 2021. Euro-denominated high-yield securities therefore present a risk of default that is certainly not zero, but is nevertheless contained and is largely covered at present by yield levels.

See also: https://latribune.lazardfreresgestion.fr/en/united-states-urgently-looking-for-houses-to-sell/


The opinion expressed above is dated April 8, 2022 and is subject to change

*Sources : Moody’s and calculation from Lazard Frères Gestion

As of : April 8, 2022

This document is not pre-contractual or contractual in nature. It is provided for information purposes. The analyses and descriptions contained in this document shall not be interpreted as being advice or recommendations on the part of Lazard Frères Gestion SAS. This document does not constitute an offer or invitation to purchase or sell, nor an encouragement to invest. This document is the intellectual property of Lazard Frères Gestion SAS. LAZARD FRERES GESTION – a simplified joint stock company with share capital of €14,487,500 – Paris Trade and Companies Registry No. 352 213 599. 25, RUE DE COURCELLES – 75008 PARIS, FRANCE