Best borrowers: High regard for high yield
High-yield corporate issuers have faced some challenges over the past 12 months but their popularity has not been in doubt. A recent market investor survey published by Fitch Ratings found that high yield is now the most favoured sector among European fixed-income investors, overtaking even non-financial corporates. According to JPMorgan, there has been a provisional inflow of €1.76 billion (6.9% of assets under management) to high-yield funds in Europe for the year to April.
Certainly Henner Bottcher, group treasurer at HeidelbergCement, which tops Euromoney’s high-yield borrower poll this year, moving from fourth place in 2011, has no doubt that investor appetite for his firm is robust despite the market turmoil. "We have said that we want to regain investment-grade status and we allocate the majority of our free cashflow to delivering. Investors know that we stick to our promises. So they are always there for us," he tells Euromoney.
HeidelbergCement and Fresenius Medical Care, which is ranked second in the survey this year after coming eighth last year, are, however, perhaps the only two regular issuers in European high yield that can be confident of market access despite the macro environment.
The rest of the market has endured a rocky 12 months characterized by sporadic windows of availability. "We came to the market in September and paid 9 5/8% and in March we paid 4% – that is a 5% difference in six months. This is not only explained by the difference in terms of the bonds – there have been huge changes to market conditions," says Bottcher.
Fresenius Medical Care reopened the market in September after the turmoil over the summer with a dual-currency trade in €400 million and $400 million tranches.