Alternative Credit Letter

While the conflict’s evolution remains unpredictable, the outlook for specific segments remains resilient despite elevated tail risks, particularly in sectors supported by fundamental drivers. With oil and gas at $90/bbl and €50/MWh, Eurozone inflation is projected to reach 2.5%, a level unlikely to necessitate further ECB tightening. Strong household savings and government support should mitigate […]

The European high yield market concluded 2025 with a notional default rate of 3.2%, representing a slight reduction compared to the previous year. A significant trend within the data is the robust recovery rate, which reached 62% in 2025, well above the long-term median of 41%. This high recovery level effectively limited the actual loss

The European High Yield market experienced an exceptional surge in activity throughout 2025, marking one of its most robust issuance periods of the decade. Annual volumes surged to an equivalent of EUR 132.1 billion, representing an 8.8% increase year on year. This activity comprised 263 tranches from 190 different issuers, a total surpassed only by

High Yield gross supply in 2025 reached EUR 110 billion, the second highest level on record and broadly in line with the market forecasts, representing an 8% increase from 2024. Corporate issuance rose 20% year on year to EUR 90 billion, driven mainly by the consumer and communications sectors. In contrast, banking issuance declined sharply,

As anticipated, the Fed implemented a 25bps rate cut, setting the new target range at 3.75–4%. The FOMC revealed that quantitative tightening will end on December 1st. Once the run-off concludes, agency debt and MBS will be reinvested in Treasury Bills, while Treasury maturities from October and November will be reinvested across the curve. Pockets

The European High Yield bond market shows significant cyclical evolution. Issuances reached their historical peak in 2021 with €149.9 billion, driven by exceptional post-COVID liquidity conditions. However, the market experienced a dramatic contraction in 2022 (€31.8 billion), followed by gradual recovery in 2024 (€120.2 billion). Meanwhile, a notable transformation in maturity structure is observed: concentration

The European High Yield market is experiencing a notable surge in issuances aimed at financing dividends, known as dividend recaps. In 2025, these transactions represent nearly 8% of total issued volume, compared to the 0-2% range observed between 2019 and 2023 and 6% in 2024. June recorded a record volume of €3.7 billion, equivalent to

AT1 bonds are trading with historically high yields and coupons, giving some investors the impression of both attractive carry and certainty of calls in the future. However, an important metric that we believe has often been overlooked during this period is the reset spread. The reset spread is the additional yield added to a market

Small and medium-sized bond issues in Europe offer higher spreads than their U.S. equivalents. This premium reflects the unique structure of the European market, where investors are often rewarded for navigating less liquid and more complex securities. Europe’s bond market is fragmented due to different tax systems, legal frameworks and bankruptcy regimes across countries. This

As of the end of May, the European High Yield index delivered a return of over 1.3%, fully erasing the losses from March and reaching new highs for the year at 2.30%. Despite this strong performance, the European High Yield market continues to offer an attractive medium and long-term opportunity, considering that default rates are