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European Leveraged Capital Markets: What lies in store?

What lies in store for European Leveraged Capital Markets (.pdf) 04 Jun 2020

The covid-19 crisis triggered a repricing of European leveraged high yield debt markets and derailed what had been a record start to primary market activity. But the market has staged a remarkable comeback since the lows of mid-March.

In the first EventsRadar live webinar Keith Mullin talked to Charlotte Conlan, Fiona Hagdrup and Youssef Khlat about future prospects for the riskiest corner of Europe's public debt markets.

Promising start

"We were anticipating a very strong 2020," said Charlotte Conlan, Head of EMEA High-Yield Bond and Loan Syndicate at BNP Paribas.

For leveraged loans and high yield bonds in particular, 2020 started on a remarkably strong footing. In Q1 alone, European leverage loan activity, including sponsored deals, totalled USD67.23bn - representing a staggering 141% YOY increase compared to the first quarter of 2019.

Similarly in European high yield bonds, the EUR13bn issued in the first quarter of this year equates to nearly a 60% increase versus activity in Q1 2019.

January in particular marked a watershed period for European leveraged finance, being the busiest month since July 2007, Conlan noted. "Investors were comfortable about risk, default levels were low and the view was that they were going lower."

What's more, Conlan stressed that the eyewatering levels were achieved "without an enormous amount of M&A," with use of proceeds dominated by refinancing and dividend recaps rather than new transactions.

Please click on the attached PDF to read the full article.
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