The European high yield bond market has, up to now, not been known for its independence.
Since it emerged as an asset class in the mid-1990s, the European market was joined at the hip with its more mature US counterpart. Most deals, regardless of currency or nationality of issuer, relied on support from US investors to succeed. "The European high yield market was a misnomer - in reality most bonds were sold into US accounts," says Geoffrey Sherry, head of European high yield debt at Chase Manhattan.
This was exacerbated by the fact that US investment banks dominate the high yield origination business on both sides of the Atlantic. Underwriters of deals were more familiar with US funds than with disparate European investors, many of whom were only slowly coming round to the idea of buying non-investment grade paper. Even last year, around two-thirds of European high yield bonds were still being bought by US accounts.
