The Report contains European leveraged finance market trends for the second quarter of 2020, which includes issuance and credit performance figures for the high yield and leveraged loan markets.
The leading use of proceeds for high yield bonds issuance in 2Q’20 was repayment/refinancing of debt with €15.0 billion, which was up 40% from €10.7 billion in 1Q’20 and up from €7.4 billion in 2Q’19.
Fitch also reported an increase in leverage loan default rates to 6.4% in June 2020 (including c* and cc* rated issuers as if those had already defaulted).
17 bond-related defaults were reported in the second quarter of 2020 by Standard and Poor’s and Moody’s, 15 in developed market Europe and two in emerging market Europe. Missed interest payment was the most frequent reason for default.
According to Moody’s, in 2Q’20 downgrades exceeded upgrades in Europe (123 downgrades to 5 upgrades), a worse ratio than 78 downgrades to 4 upgrades in 1Q’20 and than 40 downgrades to 16 upgrades in 2Q’19. S&P also reported a deterioration in the downgrades-upgrades ratio. According to S&P, in 2Q’20 downgrades exceeded upgrades in Europe (152 downgrades to 3 upgrades), a worse ratio than 97 downgrades to 9 upgrades in 1Q’20 and than 25 downgrades to 28 upgrades in 2Q’19.