European HY experiences worst month since Lehmans

ON BONDS

Cazenove's Peter Harvey discusses whether there is value in high yield securities.

August was the worst month for European high yield since Lehman defaulted in 2008. A European index of BB-rated debt fell 5.1%, as investors priced in a hard recession for the European economy. Hot money left the asset class. US leveraged loan funds experienced $4.9bn of withdrawals, while that market generated a capital loss of 6.1%. Floating rate notes underperformed their fixed rate equivalents, as global interest rates are now expected to stay lower for longer. Recent new issues fell fastest, telling you something about the quality of both holder and issuer. So is there value in B...