Escape from US bonds? Investors who have so far concentrated their operations in the US markets are now increasingly diversifying their portfolios. As a result, they are European corporate bond offerings jump in June, even the risky ones. This is what a survey by the Financial Times. According to JPMorgan data, last month issuance by high-yield companies, or those with junk rating (many of which have previously had difficulty accessing the market) have increased to approximately 23 billion eurosThis figure exceeds the previous monthly record, set in 5, by approximately XNUMX billion euros. June 2021.
US Bonds Flee, FT: Here's Why Investors Are Looking Elsewhere
According to PitchBook data, June also saw the highest number of deals ever recorded, at 44. “The market is awash with new deals,” he said. FT an investor in a European hedge fund specializing in credit. junk rated company are responding to falling financing costs due to increased demand from investors, many of whom are shifting their allocations away from U.S. assets due to the Trump's trade policy and concerns about the debt also created by the “big, beautiful bill”.
While the U.S. stock market saw a strong recovery in the second quarter, the shift away from dollar bond markets continued, helping push the greenback to its weakest start to the year in more than half a century.
Escape from US bonds, BofA data
According to data from Bank of America, European high-yield bond funds have seen seven consecutive weeks of inflows. The demand in Europe has been such that, he always notes, FT, last week companies like the Czechoslovak Group bullet manufacturer and the butter substitute manufacturer Flora have been able to access bond markets that were previously difficult to reach. The Flora operation, owned by kkr, was the first by an issuer with a triple-C rating, one of the lowest levels of the credit spectrum, in nearly a year.
It is also present on the market Carnival, the world’s largest cruise line, which has been forced to price its cruise-ship backed deals at double-digit interest rates in recent years. High-yield spreads, the extra yield that risky borrowers have to pay over government debt, fell from more than 4 percentage points in April to 3,1 percentage points at the end of June, according to data from Ice BofA. “You can now issue high-risk securities at very attractive rates. The market is booming,” he told FT a high-yield bond investor. “There are inflows into our market because people are looking to diversify their investments outside the United States.” “Managers are desperate to invest,” said a leveraged finance banker. In short, tariffs are reshaping a new global financial landscape.
