The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

European high yield: If you can’t stand the heat…

Some investors in European high yield are getting angry about deal terms but greed means little will change.

The high-yield market in Europe is up nearly 50% this year and shows no signs of slowing down. The top-10 bookrunners underwrote $70 billion of business in the year to March 31 2011 compared with $51 billion for the same period last year. In any market operating at this kind of pace tempers will inevitably start to fray. And they have.

Conditions in the leveraged finance market are described as "hyper, hyper competitive" by one banker. And this is pushing both bank and bond buyers further along the risk spectrum than some of them really want to go. A group of more than 30 high-yield and leveraged-loan investors vented their frustration in March by writing to underwriters with a list of complaints about how the market operates. "Some of the basic premises that have underpinned senior-secured bond issuance to date need to be revisited," they said. "Current structures have evolved without adequate buy-side involvement and some of the mechanisms are inappropriate for senior-secured instruments." They go on to demand that senior facilities be fully disclosed – as they are in the US – and for lenders and bondholders to have equal rights in enforcement.

Issues such as these have been chewed over in the market for some time, ever since the trend for corporates to refinance senior loans in the bond markets began.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree