Leveraged financiers are no doubt relieved that the high-yield bond market reopened in July. In the first quarter the investment-grade and sub-investment-grade markets saw increasingly aggressive transactions placed with investors desperate to put cash to work. However, when GMAC was downgraded to junk by Fitch Ratings and Standard & Poor’s, the high-yield sector was hit hard. With performance and supply struggling, it was the lowest ebb in high yield since 2002.
A market that is shut down – with investors nursing heavy losses and wary of historically high leverage – is not the best situation in which to refinance €6 billion of bridge risk.
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