The current European economic crisis has moved a rate cut this week, but this did not hinder the unstoppable search for profit from many fund managers. This allowed junk rated companies to increase value on leverage and even sell risky payment in kind bonds easily in the market.
The high yield issues never experienced such windfalls, but there is an increasing trepidation from some groups that investors are not remembering that markets can be once a seller's domain and become the buyer's domain in an instant.
The deals this week have been subscribed multiple times over, allowing bond issuers to make instruments at coupon levels that were unheard of just a few weeks back. Business has been so good that some financial institutions are declining many deals just to keep up with the supply.
The current year to date issu volume has reached Eur31.5 billion, an increase of 32% year on year according to Barclays data. The diversity of the deals in Europe looks very similar to what is happening in the US markets.
Many analysts see that the market would continue to grow to Eur400 billion by the year's end and has become four times bigger to Eur320 billion since the crash of 2008.
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