{"id":32986,"date":"2025-07-02T04:15:41","date_gmt":"2025-07-02T04:15:41","guid":{"rendered":"https:\/\/financialrush.com\/?p=32986"},"modified":"2025-07-02T04:15:41","modified_gmt":"2025-07-02T04:15:41","slug":"european-junk-bond-sales-hit-record-as-investors-cut-us-exposure","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=32986","title":{"rendered":"European junk bond sales hit record as investors cut US exposure"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description o3-type-body-base\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=7c6fa795-6e6e-457c-bc0e-54fbd2c5a65a\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Sales of risky European corporate debt surged to their highest ever level in June, as lowly rated companies take advantage of a capital flight out of US markets on fears over the fallout from President Donald Trump\u2019s trade tariffs.<\/p>\n<p>Issuance by high-yield, or junk-rated, companies \u2014 many of which have previously struggled to access the market \u2014 rose to about \u20ac23bn in June, according to JPMorgan data. That beats the previous monthly record, set in June 2021, by roughly \u20ac5bn. <\/p>\n<p>June also saw the greatest number of deals on record at 44, according to PitchBook data.<\/p>\n<p>\u201cThe market is drowning in new deals,\u201d said an investor at a European credit hedge fund.<\/p>\n<p>Junk-rated companies are responding to a fall in borrowing costs due to greater demand from investors, many of whom are shifting allocations away from US assets due to Trump\u2019s erratic trade policy and concerns about the government\u2019s huge borrowing needs. <\/p>\n<p>Although the US stock market has rebounded strongly in the second quarter, a broad shift away from dollar bond markets has continued, helping drive the greenback to its weakest start to the year in more than half a century. European high-yield bond funds, meanwhile, have posted seven straight weeks of inflows, according to Bank of America data.<\/p>\n<p>Such has been the demand in Europe that companies including <a href=\"https:\/\/www.ft.com\/content\/1ab4d2d4-74a2-42b5-a7f8-fba529b21b6a\" data-trackable=\"link\">bullets manufacturer Czechoslovak Group<\/a> and butter-substitute maker Flora in the past week have been able to tap bond markets that previously proved difficult to access.<\/p>\n<p>\u201cThere\u2019s a massive amount of cash to be invested\u2009.\u2009.\u2009.\u2009It\u2019s the kind of market where people are looking at the art of the possible,\u201d said Ben Thompson, head of Emea leveraged finance capital markets at JPMorgan.<\/p>\n<figure class=\"n-content-image n-content-image--full\" data-component=\"image-set\"><picture><source media=\"(min-width: 700px)\" srcset=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Abdbfee2a-2bce-4b08-b322-4be70df0b71a?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=1 1x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Abdbfee2a-2bce-4b08-b322-4be70df0b71a?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=2 2x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Abdbfee2a-2bce-4b08-b322-4be70df0b71a?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=3 3x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Abdbfee2a-2bce-4b08-b322-4be70df0b71a?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=4 4x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3Abdbfee2a-2bce-4b08-b322-4be70df0b71a?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=5 5x\" width=\"3500\" height=\"2500\"\/><source media=\"(max-width: 490px)\" srcset=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A0aa95177-df43-4950-a317-0bf2ffe23bce?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=1 1x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A0aa95177-df43-4950-a317-0bf2ffe23bce?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=2 2x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A0aa95177-df43-4950-a317-0bf2ffe23bce?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=3 3x\" width=\"1500\" height=\"2000\"\/><\/picture><\/figure>\n<p>KKR-owned Flora\u2019s deal marked the first by a triple C-rated issuer \u2014 one of the lowest bands in the credit spectrum \u2014 in almost a year. Investor demand for riskier credits meant it was also able to issue the bonds under Norwegian law, a regime that has traditionally been lighter on disclosures and protections than some other western markets.<\/p>\n<p>Flora priced \u20ac400mn of bonds on Monday at a yield of 8.625 per cent, roughly four percentage points lower than other outstanding debt with a similar rating, and after the company had to pull another bond deal last year.<\/p>\n<p>Prague-based CSG was able to price new five-year dollar and euro debt at yields of 6.5 per cent and 5.25 per cent respectively last week. That marks a dramatic decline in borrowing costs since its most recent financing, a $775mn bond in November that the Financial Times reported was <a href=\"https:\/\/www.ft.com\/content\/5c1b8f61-1399-4057-bd07-f3ae71b3336c\" data-trackable=\"link\">sold to private credit firms<\/a> at an interest rate of more than 11 per cent.<\/p>\n<p>Also in the market offering new euro-denominated debt to investors is junk-rated Carnival, the world\u2019s largest cruise operator, which in the past few years was forced to price deals secured on its cruise ships at double-digit interest rates. <\/p>\n<p>High yield spreads \u2014 the extra yield over government debt that risky borrowers must pay \u2014 have dropped from more than 4 percentage points in April to 3.1 percentage points at the end of June, according to Ice BofA data. <\/p>\n<p>\u201cYou can print pretty high risk stuff at very attractive rates at the moment. The market is running red hot,\u201d said one high-yield bond investor. \u201cThere are inflows coming into our market as people are looking to diversify away from the US.\u201d<\/p>\n<p>President Trump\u2019s trade policies have prompted many big investors to rethink their overwhelming preference for the US, given the greater level of uncertainty.<\/p>\n<p>\u201cThere\u2019s a huge amount of capital flowing into the asset class\u2009.\u2009.\u2009.\u2009and we are starting to see larger managers focus more on Europe,\u201d said Thompson. <\/p>\n<p>Issuers with troubled pasts, or those offering complex and subordinated instruments such as payment-in-kind bonds \u2014 where interest can be rolled up into the principal to be repaid on maturity \u2014 have also been eagerly welcomed by investors with large amounts of cash to deploy.<\/p>\n<p>Footwear giant Skechers last week priced \u20ac1bn of bonds, alongside another $2.2bn of bonds that included a payment-in-kind feature, with the euro portion being increased from an initial offering size of \u20ac750mn.<\/p>\n<p>\u201cManagers are desperate to invest,\u201d said one leveraged finance banker.<\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/7c6fa795-6e6e-457c-bc0e-54fbd2c5a65a\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this&hellip;\n","protected":false},"author":5,"featured_media":32987,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-32986","post","type-post","status-publish","format-standard","has-post-thumbnail","category-us","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32986","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=32986"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/32986\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/32987"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=32986"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=32986"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=32986"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}