The European high-yield bond market is set for a record year of issuance in 2014, according to research by continental asset manager Candriam.
Patrick Zeenni, the company’s deputy head of high yield and credit arbitrage, said there had been a “significant increase” in new bonds being issued by companies based in emerging markets and “non-core” European countries.
He said: “Confidence around the high-yield asset class is rising, as the need for refinancing remains high. In addition, its ability to inject diversification into a portfolio is also crucial in today’s environment.”
Investors have been pumping cash into high-yield bond funds in a bid to secure income, as interest rates are expected to remain low for the near future. Retail investors in the UK put a net total of more than £300m to work in the IMA Sterling High Yield sector in 2013, according to IMA data.
But this has led to high-yield bond yields falling as demand has driven prices higher, to the point where the securities are more sensitive to movements in government bonds than is usually the case.
Investment Adviser reported last month that bond managers were moving to riskier areas of the high-yield market in an effort to counteract the asset class’s increased sensitivity to interest rates.
