High-Yield Bonds: Phoenix from the ashes?

Investment bankers devoted hefty resources in 1997 and 1998 to promoting and gearing up for a European high-yield bond market. Following the Russian crisis, it collapsed. But proponents of European junk won’t let a catastrophic market crash deter them. They argue that plummeting values could be the market’s making. Spreads that have widened beyond all economic justification have finally made high yield sexy for the end-investor.

In a bulletin called “Every Cloud…?”, chief European bond strategist at Barclays Capital Gary Jenkins and colleagues observe that despite the hype accompanying the birth of European high-yield since early 1997, the region’s real investors generally stayed aloof.