European high-yield bond volumes were solid in April 2015 at $18 billion, but remained well below the $27 billion recorded in April 2014, says Moody's Investors Service in the May edition of its "High Yield Interest -- European Edition" publication.
Rated leverage loan volumes trailed behind at $3.8 billion for April, significantly lower than the $17.0 billion recorded in April 2014 and the lowest monthly level for 2015.
"Interest rate volatility and UK elections served as distractions for investors in early May, affecting the high-yield bond markets," says Tobias Wagner, a Moody's Assistant Vice President - Analyst. "Reasons for potential market volatility in 2015 remain multi-fold, and the weaker bond pipeline for May could narrow the volume gap between bonds and loans seen in April. However, both bond and loan markets face an uphill battle to beat the quarterly records set last year."
In addition to refinancing, high-yield bond volumes in 2015 are very much driven by "Ba-type" or larger, M&A-related transactions.
However, bond issuance at the single-B level, particularly for companies rated B3 and lower, remains limited with only a few deals since the beginning of 2015. First-time issuer activity also remains well below the same period last year.
Meanwhile, credit quality remains stable with more upgrades than downgrades in April, although rating actions on Russia-based companies continue to provide for increased volatility of the speculative-grade upgrade/downgrade ratio.
