Here’s What to Watch in European High-Yield Bonds This Week

(Bloomberg) -- At least two borrowers in Europe are marketing high-yield deals this week as issuance starts to tail off ahead of a seasonal slowdown in August.

Borrowers are still expected to tap the market this week and next, according to bankers, adding to a glut of offerings that has already swelled high-yield issuance to a record.

In the primary market, United Group BV is raising 300 million euros to pay for the acquisition of Optima Telekom of Croatia, among other purposes.

U.K.-based McLaren Finance Plc has tapped the U.S. market for a $620 million high-yield note to refinance old debt and boost its balance sheet.

The leveraged loan calendar is also busy, with nine issuers expected to price deals this week, according to data compiled by Bloomberg. Loan prices are hovering around their pre-pandemic levels, at 98.6 cents on the euro, the S&P European Leveraged Loan Index shows.

While investors have plenty of deals to sift through, sentiment in global markets has soured a bit amid higher-than-expected inflation readings and growth concerns.

The Markit iTraxx Europe Crossover index, which tracks credit-default swaps on junk-rated European credit, rose as much as 2.5% on Monday to the highest since June 8. The index has widened for the past four sessions, its longest streak since March 5, Bloomberg data show.

Forthcoming Economic Data:

• Thursday: ECB Rate Decision
• Friday: U.K. Retail Sales; Euro-Area Flash Composite PMI Survey; U.K. Flash Composite PMI Survey; Bank of Russia Rate Decision
• Read more: EMEA Week Ahead

New Sales

• European high-yield issuance year-to-date is EU88.7b, up 87% compared with last year, Bloomberg data show

New Performance Review

High-yield issuers sold 164 all-new syndicated bonds year-to-date

• 100 of the 159 (63%) that have pricing information available are quoted tighter than launch, according to pricing sources as determined by Bloomberg on July 19 8:50am London time

Fund Flows

• High-yield funds with a European focus saw inflows of $339 million in the week ended July 14, compared to inflows of $49 million in the previous week, BofA Global Research analysts wrote, citing EPFR Global data
• Global funds recorded outflows of $305 million, while U.S.-focused funds saw outflows of $290 million, the analysts wrote

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