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. © 2020 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

European high-yield market: The high-yield trap

Orderbooks for European high-yield deals are unprecedented. Has the market outgrown its traditional allocation procedures?

Although everyone in the market grumbles about the chase for yield, most of them seem to be joining in. “People are desperate to buy credit,” says one banker. “€20 million to €40 million MTNs for Italian companies that no one has ever heard of are going through.”

There is a strong sense that the market is becoming irrational, but buyers are caught up in the need to find yield and put money to work. “There is only high risk now, not high yield,” says a DCM head. “Investors feel they are being coerced into buying some of these products. Cash is returning nothing and redemptions are high. Secondary markets are not functioning, so they have to get involved in primary. Credit is simply too tight for the cycle.” The problem is that every investor faces the same challenge. “With the US dollar credit index spread at 100bp, to beat the index many funds are holding an overweight and hoping the index grinds tighter.

Take out a complimentary trial

Take out a 7 day trial to gain unlimited access to and analysis and receive expertly-curated updates direct to your inbox.


Already a user?

Login now


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