Moody's: UK's vote to leave the EU nearly halves EMEA high-yield bond and rated leveraged loan issuance in June

Tuesday 19 July 2016

London – MENA Herald : Europe, Middle East and Africa (EMEA) high-yield bond and rated leveraged loan issuance nearly halves year-on-year in the month of the UK's vote to leave the European Union (EU), says Moody's Investors Service (Moody's) in an update to the markets published today.

High-yield bond issuance in June 2016 dropped to $2.6 billion from $6.8 billion in May 2016, below the $6.7 billion recorded in June 2015. Rated leveraged loans totalled $4.5 billion, compared with $5.7 billion in May 2016 and $7 billion in June 2015.

Moody's newsletter, titled "High Yield Interest: European Edition" is
available on

"High-yield bond markets are likely to remain volatile for the rest of the year. While some issuance activity is likely to continue, full year issuance levels for 2016 are unlikely to meet last year's level",
explains Peter Firth, a Moody's Associate Managing Director at Moody's.

Bond issuance from EMEA speculative-grade non-financial corporates rated by Moody's reached $33.4 billion in H1 2016, far below the $58.9 billion in H1 2015, and was the slowest start to a year since 2010.

Rated EMEA leveraged loan issuance in the first half of 2016 was slightly less volatile. Nevertheless, leveraged loan volumes of $22.1 billion were 46% below the $40.8 billion achieved in H1 2015.

While there could be some activity towards the end of July, Moody's expects that issuance will remain low in August, which is traditionally very quiet. Issuance could start to pick up again in September, although US elections in November and the weakened macro-economic outlook create
some uncertainty.

The newsletter also comments that Moody's expects credit quality among EMEA speculative-grade companies to remain stable although downside risks persist. Moody's stress indicators continue to indicate negative trends, not limited to the commodity and related sectors.

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