(The following statement was released by the rating agency)
Oct 02 - Fitch Ratings has published the latest edition of its quarterly European High-Yield (EHY) chart book, which illustrates recent trends in high-yield bond issuance, maturities, default rates, fund flows and relative performance, as well as secondary market risk-adjusted pricing.
"European High-Yield continues to attract support from yield-sensitive investors, with stellar total-return performance of 20% year to date being a major draw," says Michael Larsson, Associate Director in Fitch's Credit Market Research group. "Investors continue to target higher quality speculative grade credits opportunistically whenever macro concerns recede, despite the highly sentiment-driven nature of the market."
New issuance for developed market (DM) corporates to end September exceeds the full-year level achieved in 2011. This confirms the sentiment of senior European fixed income managers polled by Fitch, who continue to vote European high-yield (EHY) their most preferred asset class in Q312, for the second consecutive quarter.
Net fund flows for the year-to-date are marginally negative, due mainly to a net outflow of almost EUR2bn in May. However, the situation has largely reversed course in subsequent months - particularly after the ECB's market-boosting comments and actions.
Investors continue to seek opportunities in EHY for short-dated bonds with a preference for the most liquid names, as spreads continue to price in higher probabilities of default than the trailing twelve month default rate of 1.15% to end September would suggest.
- Total-return performance for EHY touches 20% year-to-date to end September, ahead of EM corporates and sovereigns (18%) and US HY (12%).
- DM non-financials new issuance up 23% in the first nine months of 2012 versus the volume issued during the same period in 2011.
- Investors continue to provide favourable funding conditions for credits rated 'B+' and higher, driving average fixed coupons down, close to 6%.
- EHY default rate remains low, at 1.15% for the trailing twelve months to end September, although appears set to pick up as growth concerns persist.
The European High-Yield chart book is a complement to Fitch's in-depth research and topical commentary on the sector which can be found at .
Link to Fitch Ratings' Report: European High-Yield Chart Book - October 2012 ((Bangalore Ratings Team, Hotline:+91 80 4135 5898 Jyothsna.BN@thomsonreuters.com, Group id: BangaloreRatings@thomsonreuters.com, Reuters Messaging: Jyothsna.BN.firstname.lastname@example.org))