Funding costs surge and aggressive deals are shut down as yield hungry investors flee the European junk bond market. This exit from the market normalized the asset class and cleared warnings of a bigger correction in the future, according to high yield investors.

Peter Aspbury, a JP Morgan Asset Management's high yield portfolio manager said, "Good deals will still be able to come to market at a level, but more marginal businesses may get pushed out."

"Those depending on the high-yield market to provide them with a liquidity lifeline will be burning incense on the altar of low yields," Aspbury added.

Freshly restructured Kloeckner Pentaplast, a global producer of plastic films, priced a PIK toggle at a measly 10.25% during May. This rating upsized the deal by half on the back of demand.

Another company, Unilabs, offered 13 percent yield on its EUR175 million PIK toggle one month after Kloeckner Pentaplast's pricing.

"When we launched the deal, portable bonds were pricing without a blink," said an anonymous source with knowledge on the deal. "The boot is definitely on the other foot with investors. They rightly feel they have more negotiating power," he summed.