European Chart of the Week: 16th December 2019
Investor appetite for high yield bonds has pushed yields tighter in the primary market this year. The average yield to maturity (YTM) on BB bonds has averaged 3.31%, down from 3.55% last year. The tightening has been more pronounced in the second half of the year,with the average YTM falling to 2.78%.
The low/negative interest rate environment has continued to attract money to the asset class. Contributing to the demand for higher quality paper in the high yield space are investment grade buyers who have been actively coming down market into the BB area given their search for yield and in turn pushing pricing tighter and prompting more issuance in this category.
Single-B yields are also lower this year, averaging 5.16%, down from 6.03% in 2018. Most recently in 4Q19, bond yields have averaged 5% for this rating category.
Though pricing has tightened in the primary market this year, investors have been rewarded for investing in the European high yield market, with returns topping 10%.
Colm Doherty is Debtwire’s Global Head of Primary Market Analysis. He is responsible for leading the production of primary market analysis and reports focused on the leveraged loan and high yield bond markets. Prior to joining Debtwire, Colm was Director of Analysis at Thomson Reuters LPC covering leveraged loans, CLOs and high yield bonds.
Colm has a B.A. in Economics & Legal Science from National University of Ireland Galway and an MSc. in Accounting & Finance from Ulster University.
Colm Doherty is Debtwire’s Global Head of Primary Market Analysis. He is responsible for leading the production of primary market analysis and reports focused on the leveraged loan and high yield bond markets. Prior to joining Debtwire, Colm was Director of Analysis at Thomson Reuters LPC covering leveraged loans, CLOs and high yield bonds.
Colm has a B.A. in Economics & Legal Science from National University of Ireland Galway and an MSc. in Accounting & Finance from Ulster University.
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