• The pace of European high-yield bond issuance increased in the first quarter to an estimated EUR 12.7 billion, 78.9 percent higher than the first quarter 2006 volume of EUR 7.1 billion. High-yield issuance rose to EUR 37.9 billion in full-year 2006.
• The European macroeconomic environment continues tobe favourable for the high yield market based on interest rates still at historically low levels despite recent European Central Bank (ECB) tightenings, Euro zone economic growth trends and corporate profitability.
• Issuance levels are being driven by balance sheet leveraging strategies, in particular, mergers and acquisition (M&A) and leveraged buyout (LBO) transaction financing.
• Sector performance remains positive and stable, boosted by high level of market liquidity, investor demand, risk tolerance, and current credit quality metrics. Rising leveraged transaction volume and increased global market volatility introduce a potential for heightened risk exposure over the longer term as the credit cycle matures.

About the Report

Done in partnership with European High Yield Association (now AFME / EHYA), the EHYA Leveraged Loan and High Yield report is a quarterly report on the trends and statistics of the European leveraged finance market, including both high yield loans and leveraged loans. Issuance volumes, credit trends, global comparative issuance data, market highlights and commentary are included.

Credits

EHYA

• Gilbey Strub

SIFMA Research

• Michael Decker
• Steven Davidson, CFA
• Marcelo Vieira
• Bryan Gross
• Tiffany Coln