The softer tone in risk assets during the first trading sessions of the new year is unlikely to thwart what is expected to be a busy January for European leveraged primary markets, as issuers seek to capitalise on attractive conditions across both high yield and loans.
“I don’t think the [soft] opening week changes anything in terms of primary markets,” said one high-yield head at a European bank. “It was a very, very strong rally into year-end, and the levels we are at now in terms of spreads and rates are still very attractive for issuers.”
High yield bonds led the new year reopening on the back of a stellar start for investment-grade supply, but loans are expected to pick up very soon, with supply for the first month or so likely to be fairly evenly split between the two markets. “Timetables have slipped and this may push the initial peak of the market into February,” said a banker. In an early year estimate sent to buyside clients but seen by LCD, JP Morgan says the visible leveraged pipeline for the first quarter stands at roughly €19.8 billion, divided more or less equally between bonds and loans. Of this supply, roughly €5.9 billion in bonds and €5.8 billion in loans is expected from refinancing deals…
The full analysis can be read here.
Comment on this article