Moody’s: Spain’s $2.6 billion of high yield issuance 2015 made it second highest in Euro periphery

Pieter Rommens, vice president at Moody’s - Martes, 09 de Febrero

• 
• 
• 
• 
• • 
  • 
  • 

Moody’s report on high yield issuance in the Euro area periphery in 2015 and the likely volume of issuance this year. The report finds that high yield issuance fell by 64% to $10.9 billion last year and is unlikely to bounce back in 2016. “High-yield issuance in Spain, Italy, Portugal, Ireland and Greece is not showing any signs of recovery in 2016 from last year’s trough, mainly because of investors' preference for paper from large, well-known repeat issuers in the core euro-area countries.” says Pieter Rommens, a Moody’s Vice President – Senior Analyst and author of the report.

“Market volatility from China’s economic slowdown, low energy and base metal prices, diverging monetary policies in Europe and the US and the Brexit referendum are also playing a large part in keeping risk appetites under wrap,”adds Pieter.

Report’s key takeaways: 

 

• Spain and Italy, issued $2.6 billion and $7.3 billion of high yield bonds, respectively, representing 92% of the Euro area periphery's total volume

 

• Volumes were driven by refinancing in 2015, with M&A and LBO-related deals and first-time issuers dropping sharply

 

• Issuance in Italy, Spain, Portugal, Greece and Ireland fell by 64% to $10.9 billion last year, underperforming the European Union as a whole

 

• Issuance was almost entirely driven by refinancing from repeat, large issuers

 

• Total first-time issuer volumes tumbled to $260 million in 2015 from $2.5 billion in 2014 (nearly ten times less) and $8.5 billion the year before

 

• LBO-driven volume collapsed to $123 million, the lowest level since 2010, unlike the trend in the rest of the European Union, where LBOs remained a significant driver

 

• Issuance in Greece and Ireland almost dried up, falling to $632 million and $284 million respectively

 

• There was no rated high-yield issuance from Portugal for a second year in a row

 

• Telecoms and auto companies dominated 2015’s new high yield issuance, in line with the EMEA trend

 

• However, the seven largest issuers in the periphery could create a $10 billion floor for new issuance in 2016. These companies include Fiat Chrysler Automobiles and Telecom Italia. While we expect some of this refinancing to be done with leveraged loans, which investors increasingly see as a safe haven in volatile credit markets, some of the high-yield volume loss will be made up by opportunistic early refinancing.

 

This report doesn’t indicate any rating action.

 

 

 

 

[Volver]