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'Blockbuster' phase of EMEA leveraged finance issuance appears to be over

Publication Date: 18 Apr 2019 - By Gaurav Sharma (Editor ReachX) By Gaurav Sharma (Editor ReachX)
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Equity Fundamental Macro Fixed Income/Credit Global Financial Services

The 'blockbuster' phase of EMEA [Europe, Middle East and Africa] leveraged finance appears to be well and truly over ,as volumes in the first quarter of 2019 significantly lagged the same quarter in the previous two years. 

The revelation came in rating agency Moody’s latest monthly High Yield Interest report, which concludes that Q1 2019 leveraged finance issuance dropped more than 50% versus first quarters of 2017-18, even though March issuance held firm “as risk appetite reawakens.”

On a monthly basis, leveraged loan issuance volumes reached $9.4 billion in March 2019, marginally up from the $9 billion issued in February, and steady with the $9.3 billion in March 2018.

High-yield bond volume, at $4.7 billion was slightly ahead of the $3 billion issued in February, but less than half of the $9.2 billion for March 2018.

Also in Q1 2019, the European covenant quality indicator improved (to 3.80 from 3.85) after hitting its lowest recorded level in Q4 2018. This marked the first improvement in the E-CQI since Q4 2016.

"At $30 billion of issuance, Q1 2019 volumes are less than half of the $64 billion in Q1 2018 and nearly 65% below the $82 billion in Q1 2017," said Peter Firth, Associate Managing Director at Moody's. "While volumes fell in Q1, loans continue to dominate issuance fuelled by CLO activity."

Disclosure:

I have no positions in any of the securities referenced in the contribution

I do not use any non-public, material information in this contribution

To the best of my knowledge, the views expressed in this contribution comply with UK law

I agree with the terms and conditions of ReachX

This contribution is for informational purpose and does not constitute investment advice nor is it an offer to sell or buy, nor is it a recommendation for any security.

Gaurav Sharma Editor ReachX

 

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