High Yield bonds delivered a modest total return of 0.28% in April. This was supported by a 30 basis points rally in Bunds and a solid 0.4% carry, which helped counterbalance a 36 basis points widening in spreads and a larger excess return loss of 0.8%. The performance reflects a partial rebound from the early-April selloff, when spreads widened by 110 basis points. Primary issuance remained subdued at EUR 5.6 billion, while three major “rising stars” once again reduced the index par amount by EUR 3.6 billion, bringing the year-to-date par shrinkage to EUR 10.5 billion.
We anticipate that net supply in May will be positive but slightly below the historical average of EUR 2.5 billion. European High Yield spreads remain attractive and carry provides solid protection against potential trade-related volatility.
