Research by Fitch showed that non-financial corporate bond issuance in developed markets was up 23% over the first nine months of 2012 when compared with the same period in the previous year. However, investors identified a number of threats to increasing issuance.
According to the rating agency’s latest quarterly investor survey, 74% of European investors cited ongoing volatility in the single currency bloc as a high risk to continued healthy high-yield issuance on the continent.
In addition, 68% of respondents highlighted slow economic as another high-risk factor looming over the European high-yield market.
“Investors also flagged that some sector-specific factors have the potential to dampen the high-yield party,” Fitch said. “More than half see a high risk that issuance volumes will suffer as investors reassess value given rising default risk.”
Secondary market illiquidity and the crowding of portfolios by issuers from peripheral eurozone countries were seen as less worrying by the survey’s respondents. However, a significant minority of about 30% still said factors such as this as a high risk.
