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High Yield Bond Issuance Jumped Sharply

Global high yield bond volumes have reached $146.5bn to date this year – a 34.4 per cent increase over the same period last year and the highest year-to-date total on record.

In Europe the jump has been especially sharp – a near doubling – with year-to-date issuance reaching $33.5bn, up 77.4 per cent on the same period last year, said data provider Dealogic. March has been the busiest month on record for the high yield markets.

Since the financial crisis, European companies, in particular, have had to shift their funding source from banks to the bond market resulting Europe has seen a much bigger jump in volumes than the US.

Also there are a lot of small first-time issuers coming to market. The main driver of this pick-up is the longer-term shift from loan to bond financing in Europe and the capital requirements under Basel III are exacerbating that trend.

Many corporate, not just private equity-owned companies, are using the high yield bond markets for acquisition financing.

In addition, there had been the highest proportion of sterling-denominated high yield bond issuance since 2002, with UK-focused corporate busy in the market. Another growing feature of the European market was an increasing number of triple-C rated issues