Leveraged finance volumes in Europe, the Middle East and Africa (EMEA) “dropped significantly” in 2018 and came to a virtual halt in December, according a leading rating agency.
In a note to clients, Moody's Investors Service said issuance volumes has slumped 33% on an annualised basis.
The key driver was the negligible EMEA leveraged finance issuance in December, with bonds virtually stopping from mid-November. Total 2018 issuance plunged to $181bn from $270bn in the previous year.
"The 33% shortfall in leveraged finance issuance compared to 2017 was even larger than expected," says Peter Firth, Associate Managing Director at Moody's.
Bond issuance was down the most at 36%, or $66bn versus $104bn in 2017, while loans were down 31% and shared a larger share of the pie (i.e. 63% versus 61% in 2017).
The European covenant quality indicator fell to 3.83 in the fourth quarter of 2018, its lowest recorded level, partially due to a very weak third quarter attributable to eight bonds scoring in Moody's weakest protection category.
