[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”4.16″ custom_padding=”||2px|||” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_row admin_label=”row” _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||” theme_builder_area=”post_content”][et_pb_text admin_label=”Text” _builder_version=”4.27.7″ header_2_font_size=”25px” header_2_line_height=”1.2em” background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” text_font_size=”20px” sticky_enabled=”0″]<\/p>\n
The new issue market for European high-yield bonds is in full swing and should dispel concerns about the \u201cmaturity wall\u201d! This makes the market attractive despite slightly lower yields!<\/p>\n<\/p>\n
[\/et_pb_text][et_pb_text admin_label=”Text” _builder_version=”4.27.7″ header_2_font_size=”25px” header_2_line_height=”1.2em” background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” text_font_size=”21px” sticky_enabled=”0″ text_font=”Celias – medium||||||||”]<\/p>\n
Issuers Are Returning to the Market<\/p>\n
[\/et_pb_text][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” header_3_font=”|700|||||||” header_3_font_size=”20px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n
While issuers in the European high-yield sector remained somewhat reluctant in 2022\u2014and to some extent in 2023\u2014to accept the yield levels resulting from higher interest rates, this has changed significantly in recent months.<\/p>\n
Thanks to sharply lower risk premiums, financing costs for issuers have once again become significantly more attractive. In contrast to approximately 7%\u20138% in 2022\/2023, average refinancing costs in 2024 have fallen below 6%, and higher-quality issuers can even issue bonds at rates below 5% again.\n<\/p>\n
[\/et_pb_text][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” header_3_font=”|700|||||||” header_3_font_size=”20px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” text_font=”Celias – medium||||||||” text_font_size=”21px” sticky_enabled=”0″]<\/p>\n
High-Yield Benchmark Yield (YTW) vs. New Issue Yields in 2024t<\/p>\n
[\/et_pb_text][et_pb_image src=”https:\/\/ha-gim.com\/wp-content\/uploads\/2024\/07\/csm_2024_06_03_Blitzlicht_-_HY_Neuemissionstaetigkeit_Graph_d82e00cefb.jpg” title_text=”csm_2024_06_03_Blitzlicht_-_HY_Neuemissionstaetigkeit_Graph_d82e00cefb” _builder_version=”4.27.7″ _module_preset=”default” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” align=”center” sticky_enabled=”0″][\/et_pb_image][et_pb_text _builder_version=”4.25.2″ _module_preset=”default” text_font_size=”14px” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n
Source: Bloomberg, new issues in the European high-yield market in 2024, excluding CCC-rated bonds, minimum volume \u20ac150 million, no FRNs; copper line = yield to worst of the Bloomberg Euro High Yield ex Financials BB-B 3% Capped Index (H23969EU Index)<\/span><\/p>\n [\/et_pb_text][et_pb_text admin_label=”Text” _builder_version=”4.27.7″ header_2_font_size=”25px” header_2_line_height=”1.2em” background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” text_font_size=”21px” sticky_enabled=”0″ text_font=”Celias – medium||||||||”]<\/p>\n High Risk Appetite<\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” header_3_font=”|700|||||||” header_3_font_size=”20px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n This trend is supported by investors\u2019 increased risk appetite.<\/p>\n At the beginning of the year, many investors were still concerned about the European economy, a resurgence of inflation, and the possibility of further interest rate hikes. Their portfolios were positioned relatively defensively and held a high cash position.<\/p>\n Consequently, demand for investment opportunities was high as these concerns subsided over the course of the year. Even weaker issuers were able to refinance without difficulty, as evidenced by yields on new issues reaching up to 10% in some cases.<\/p>\n [\/et_pb_text][et_pb_text admin_label=”Text” _builder_version=”4.27.7″ header_2_font_size=”25px” header_2_line_height=”1.2em” background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” text_font_size=”21px” sticky_enabled=”0″ text_font=”Celias – medium||||||||”]<\/p>\n The \u201cMaturity Wall\u201d Is Crumbling<\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” header_3_font=”|700|||||||” header_3_font_size=”20px” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n By far the largest use of proceeds from new issues was the refinancing of existing debt.<\/p>\n Consequently, concerns about the refinancing needs that had built up in recent years (the \u201cmaturity wall\u201d) have subsided significantly. The successful extension of maturities in the high-yield market should limit any rise in default rates should the economic environment or refinancing conditions deteriorate again.<\/p>\n [\/et_pb_text][et_pb_divider _builder_version=”4.27.7″ _module_preset=”default” theme_builder_area=”post_content” divider_weight=”2px” hover_enabled=”0″ sticky_enabled=”0″][\/et_pb_divider][et_pb_text admin_label=”Text” _builder_version=”4.27.7″ header_2_font_size=”25px” header_2_line_height=”1.2em” background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ global_colors_info=”{}” theme_builder_area=”post_content” text_font_size=”21px” sticky_enabled=”0″ text_font=”Celias – medium||||||||”]<\/p>\n Conclusion: Refinanced = Risk Reduced!<\/p>\n [\/et_pb_text][et_pb_text _builder_version=”4.27.7″ _module_preset=”default” header_3_font=”|700|||||||” header_3_font_size=”20px” hover_enabled=”0″ border_color_top=”#93642e” global_colors_info=”{}” theme_builder_area=”post_content” sticky_enabled=”0″]<\/p>\n Thanks to the absence of a more pronounced economic downturn and an inflation trend that should not preclude ECB interest rate cuts later this year, risk premiums\u2014and thus refinancing costs\u2014for European high-yield issuers have improved significantly in 2024. Companies have taken advantage of this and abandoned the issuance caution they had shown over the past two years. Thanks to the significant increase in new issuance activity, the refinancing needs that had built up in some cases were addressed.<\/p>\n The reduced refinancing needs make companies less reliant on short-term access to the capital markets and should help prevent a significant rise in default rates, even in the event of economic weakness and market volatility.<\/p>\n In this environment, yields of over 5% on European high-yield bonds remain attractive and should have a firm place in the portfolios of income-oriented investors.<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.25.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_row _builder_version=”4.25.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_column type=”4_4″ _builder_version=”4.25.2″ _module_preset=”default” global_colors_info=”{}” theme_builder_area=”post_content”][et_pb_toggle title=”Risks” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#000000″ open_icon_color=”#000000″ _builder_version=”4.25.2″ _module_preset=”default” border_width_all=”0px” border_width_bottom=”1px” border_color_bottom=”#93642e” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n Price losses due to rising yields and\/or increased risk premiums are possible. Even a total loss cannot be ruled out. Past performance is not indicative of future results, nor can future performance be guaranteed.<\/p>\n [\/et_pb_toggle][et_pb_toggle title=”Disclaimer” open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#000000″ open_icon_color=”#000000″ _builder_version=”4.25.2″ _module_preset=”default” border_width_all=”0px” border_width_bottom=”1px” border_color_bottom=”#93642e” global_colors_info=”{}” theme_builder_area=”post_content”]<\/p>\n This marketing communication, as defined by the Securities Trading Act, is provided solely for informational purposes and should not be construed as personal investment advice, a recommendation, or a solicitation to buy, sell, or hold a financial instrument, or to adopt an investment strategy.<\/p>\n The opinions and statements contained in this document reflect the current assessment as of the date of publication. The information provided does not constitute a complete analysis of all material facts relating to a country, region, or market. [\/et_pb_toggle][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" The new issue market for European high-yield bonds is in full swing and should dispel concerns about the \u201cmaturity wall\u201d! 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