European chart of the week: High yield bonds and leveraged loans trade off amid coronavirus fears
High yield bonds and leveraged loans have traded off amid the coronavirus fears that have roiled the equity markets due to worries about the impact on global economic growth and earnings.
The ICE BofA Euro High Yield Index has widened to 3.06%, up from 2.40% a week ago. Not surprisingly, the riskier end of the market experienced a more pronounced widening in this time period, with single-B yields climbing to 4.69% from 3.63%, while BB’s in comparison have increased to 2.05% from 1.56%. Against this backdrop, European high yield bond issuance has slowed recently with no deals pricing this week, though Fugro was marketing their deal. In the prior week, there was two deals that priced, Catalentand Silgan.
Institutional term loan prices have also declined recently, down 88bps on average this month to 97.91 and the market is now also relatively less frothy at the top, with the par-plus share declining to 22% from 60%. Of the top industries, the entertainment & leisure sector has been impacted most, with loan prices down 140bps on average. Despite the softer secondary market, the primary loan market still managed to see a small number of deals allocate this week, including Atnahsand Inovyn.