European HY bond issuance year-to-date has generated €121.3 billion in proceeds, the second highest results in AFME’s records. The figure fell just below 2021’s landmark €123.7 billion, generated following post-Covid economic recovery.
Proceeds from HY bond issuance rose by 92.2% year-on-year (YoY), according to AFME, generating €33.1 billion in Q3 2024, but fell by 30.2% on a quarterly basis due to seasonally low issuance in August.
A tightening option-adjusted spread, peaking at 4% in August and ending Q3 at 3.4%, suggests a reduction in risk over the quarter.
According to Moody’s, the speculative-grade bond default rate for the quarter was approximately 3.6%. S&P presented a more drastic picture, setting the default rate at 4.7% in September and continuing the upward trajectory it has recorded since 2022.
A similar story was seen in European leveraged loan origination, which was up 46% YoY in Q3 but down 45% quarter-on-quarter (QoQ). In turn, proceeds dipped 55% from Q2 to €42.3 billion. The bulk (97%) of deals year-to-date have been covenant-lite, according to credit intelligence firm Octus.
Per Fitch, the trailing 12-month default rate dropped to 2.3% in September – from 3.6% in June.
©Markets Media Europe 2024
