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Moody's: EMEA high-yield market remains set for another record year, as private equity IPOs continue

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June 11
7:11 PM 2014

With high-yield bond issuance of USD13.8 billion in May, and cumulative issuance reaching USD70 billion, 2014 looks well placed to set another issuance record says Moody's in the June edition of its "High Yield Interest -- European Edition" publication. Positive sentiment for the remainder of 2014 was also expressed at Moody's high-yield conference on May 21.

Moody's also expects to see further European private equity IPO exits, particularly given recent policy actions and statements by the European Central Bank, and despite recent setbacks for certain UK IPOs. "IPOs remain the favoured exit route for many private equity-owned companies, although they retain parallel processes for secondary (or tertiary) sales to other sponsors in case the equity markets weaken," says Chetan Modi, Managing Director for Moody's European leveraged finance. "Changes in credit metrics and financial policy are key rating considerations".

Although covenant protection in Europe remains stronger than in the US, protection in both markets is deteriorating at a similar rate. In particular debt incurrence and restricted payment capacity increased in 2013. Moody's also see more subtle changes that make it more difficult for investors to determine the actual capacity.

The report also examines the strong growth of Scandinavian high-yield ratings, with international bonds increasingly complementing the Nordic bond market.
Each month, "High Yield Interest -- European Edition" provides unique Moody's data and commentary on the European high-yield market. "High Yield Interest -- European Edition" is available on moodys.com.

Subscribers can access the report via this link: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_171778

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