LONDON, Aug 7 (IFR) - Issuance of high-yield debt in Europe
outstripped US volumes for the first time in 2014, helped by
European banks junior debt issuance, M&A financing and
first-time borrowers, Fitch said in a report published on
Year-to-date issuance out of Europe has hit EUR113bn,
representing a 34% year-on-year growth, as a flurry of companies
tapped the junk bond market for the first time, while veteran
high-yield issuers brought jumbo refinancing trades to lock in
all-time low yields.
The market also benefited from a surge in M&A-related
issuance, including Altice and Numericable's EUR12bn-equivalent
deal, the largest ever high-yield bond package sold on either
side of the Atlantic.
The ratings agency also includes high-yield debt from
financials as well as corporates in its figures, and a key
driver of the increase was the large number of European banks
looking to bolster their balance sheets with deeply subordinated
capital deals. Junior bond issuance from banks increased nearly
four times on the previous year in this time, according to
Issuance out of peripheral Europe also ballooned, with
EUR28bn of new deals out of Italy and Spain, a more than
threefold increase on volumes in first half of 2013.
High-yield has outperformed other areas of credit throughout
much of 2014, but is entering August on a bit of sour note, as
July saw total negative returns in Europe for the first time in
over a year.
Despite this, Fitch believes that the outlook for European
high-yield is still compelling as long as operating cashflows at
businesses remain stable to improving.
The ratings agency also states that many committed
high-yield investors will welcome a correction, as it will
increase the premium on new issues and better reward good credit
(Reporting by Robert Smith; Editing by Philip Wright)