Moody's: EMEA high-yield market sees worst January since 2009

High-yield bond issuance in Europe, the Middle East and Africa has hit its worst January record since 2009, as market conditions remain challenging, says Moody's Investors Service in the January edition of "High Yield Interest -- European Edition".

High-yield bond issuance was $1 billion in January 2016 compared to $14.9 billion in January 2015. Rated leveraged loan volumes were slightly better at $5.9 billion in January 2016, but still below the $7.3 billion recorded in January 2015.

"High-yield market activity has dwindled even further due to rising equity market volatility, the slowdown in emerging markets led by China, and currency volatility," says Peter Firth, a Moody's Associate Managing Director. "We expect that activity will come in spurts throughout 2016, particularly for issuers with weaker credit profiles or exposure to industries, like oil and mining, under pressure."

Furthermore, 34 EMEA speculative-grade companies are negatively affected by lower commodity prices and part of Moody's global ratings recalibration for the oil and gas industry and the mining industry. Cross-sector indicators such as the Liquidity Stress Index and the share of issuers rated B3 negative and below also continue to rise. With possibly more fallen angels in 2016, the speculative-grade universe could broaden significantly over the year.

However across corporate sectors in EMEA, the majority of outlooks remain stable with relatively low refinancing risk and some EBITDA growth expected for most sectors, particularly consumer-facing industries. Overall, Moody's notes that performance is becoming increasingly fragmented and uneven across sectors and issuers.