'Where's the junk?' ask investors

摘要

European high-yield investors eager for diversification are crying out for riskier credits and structures, to move away from a market that has become dominated by bank debt refinancing deals. Bond-backed LBOs have been few and far between in 2014, forcing investors to subsist on a steady diet of refinancings, and pushing them into more loan-like senior secured structures. "The low volume of European LBOs and the deleveraging of the region's banks has created a glut of senior secured loan-to-bond deals with small scope for price appreciation," said Peter Aspbury, a high-yield portfolio manager at JP Morgan Asset Management. "High-yield investors would welcome an increase in traditional subordinated LBO debt just for the opportunity to have good credit selection rewarded with returns that are more equity-like than loan-like." So far this year, there have only been three Triple C rated high-yield bonds in European currencies, compared with eight by this point in 2013. Volumes have dropped from €2.6bn last year to €2bn this year.