CFA, Credit Strategy
The end of US HY “mini” default cycle (almost completely commodity-driven) is approaching. Our regressions point to a significant fall in US default rates from the 6% area to 3.7% by December. No material deviation is expected from the still-benign European default cycle, which is likely to remain stable and low by historical standards in 2017, as well.
The ECB’s QE initiative has indirectly supported a record supply of IG corporate debt in response to strong demand for yield: as a consequence, in April 2015, net issuance volumes of non-financial corporate bonds already reached the levels recorded during the whole of 2014.
Sergio BERTONCINI, Bastien DRUT