Moody’s: EMEA high-yield bond issuance grows year-on-year to $31bn in Q1 2015

Data from ratings agency Moody’s show that EMEA high-yield bond issuance hit $31 billion in the first quarter of 2015, slightly ahead of issuance volumes in Q1 2014 of $29 billion.

In both the EMEA high-yield bond and leveraged loan markets, volume was driven by repeat issuers seeking to reduce their cost of debt and extend maturities, taking advantage of QE-influenced lower interest rates in the euro area.

“New high-yield issuance from the euro-area periphery is unlikely to again hit the record volumes seen in 2014 as debt capital markets are more cautious with concerns over some euro area countries’ sovereign creditworthiness re-emerging in 2015,” says Peter Firth, associate managing director in Moody’s European leveraged finance team.

“We expect markets to remain open in 2015 as search for yield and higher returns increases investors’ appetite for risk, as recently highlighted by the return of Wind and Telecom Italia to the debt capital markets. However, we expect market access to remain more difficult for first-time issuers and smaller, less well-known names with weaker credit ratings.”

High-yield bond issuance volumes in March hit $11 billion, up from the low levels seen in February 2015 of $6 billion. While March volumes were down year-on-year, strong January issuance of $16 billion propelled overall issuance for the quarter to $31 billion.

However, compared to the same period in the previous year, the number and volume of first-time issuances fell sharply with only four first-time bond issuers in Q1 2015, accounting for a meagre $1.5 billion of issuance, compared with 14 first-time bond issuers in Q1 2014 with $7.6 billion of issuance.

A similar theme was evident in the leveraged loan market, although the contrast was less pronounced. In both markets, volume was driven by repeat issuers seeking to reduce their cost of debt and extend maturities, taking advantage of QE-influenced lower interest rates in the euro area.

In addition, new high-yield issuance from the euro-area periphery is unlikely to again hit the record volumes seen in 2014 as debt capital markets are more cautious with concerns over some euro area countries’ sovereign creditworthiness re-emerging in 2015.