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Covid-19 and European high yield: a case of "darkest before dawn"?


This update provides fresh insight into the rollercoaster ride for European high yield investors in March and early April.

  • The European high yield market experienced a dramatic sell-off in early March, dropping 20% YTD by its trough in the middle of the month, but recovering somewhat since.
  • utflows have slowed as buyers have returned to the market, with small fund inflows starting to be observed, with higher-quality BB issuers preferred over Bs.
  • An influx of ‘fallen angels’, issuers downgraded from investment grade by the ratings agencies in the wider economic fallout, has impacted the market, and substituted for the absence of new issuance.
  • We believe current market levels may offer attractive entry points to European high yield.

The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.

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