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Press Release

Release Date: 30 January 2008
Contact:
Claire Hunte, +44 (0) 20 7743 9339, chunte@sifma.org

European High Yield Issuance End-of-Year 2007 Data Shows Issuance Surpasses 2006

Outlook for 2008 Subdued

London, 30 January 2008 -- The European High Yield Association (EHYA), an affiliate of the Securities Industry and Financial Markets Association (SIFMA), today released its leveraged finance data for 2007 showing total issuance volume, which includes leveraged loan and high-yield bond volume, was up 10 percent to €278.5 billion in 2007 bolstered by a strong first half of the year. Issuance in the second half of the year fell 18 percent to €125.7 billion due to market turmoil. 

The fourth issue of the European Annual High Yield and Leveraged Loan Report, which analyses and presents aggregate information and trends related to the European leveraged finance marketplace, showed high-yield bond issuance totaled €40.9 billion in 2007 compared to €37.1 billion in 2006. Second half issuance in 2007 declined 85 percent to €5.4 billion against the first half of the year. Greater investor risk sensitivity, heightened volatility, depressed and uncertain pricing and substantially reduced liquidity contributed to diminished market conditions in the European high-yield bond and leveraged loan markets in the second half of the year.

Straitened market conditions led to dramatic spread widening for high-yield bonds and leveraged loans. Negative high-yield returns were recorded for the fourth quarter and the year. However, returns for leveraged loans rebounded to positive territory in the fourth quarter, but were well below returns recorded in the first half of the year.

The report projects a subdued outlook for 2008. An annual survey of investors in European high yield bonds, conducted in November 2007 by the Financial News in co-operation with the EHYA, showed that more than half the institutions expected issuance volumes of high-yield bonds to be lower or much lower compared with 2006.

“Data suggests that the ramifications of the 2007 credit crunch are still and will continue to be felt in the leveraged loan markets. There was strong investor demand at the beginning of the 2007 but credit fears significantly reduced investors’ appetites for high-yield bonds,” said Gilbey Strub, EHYA’s managing director.  “We expect a pick-up in traditional investor segments due to the emergence of “opportunity” funds,” she added.

The full report with additional details and graphics on market issuance is attached or can be downloaded from www.ehya.com

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The European High Yield Association, an affiliate of the Securities Industry and Financial Markets Association (SIFMA), is a non-profit trade association representing participants in the European high yield market. Membership is open to banks, investors, law and accounting firms and rating agencies. The EHYA is an independent, self-funded forum of SIFMA. For more information, visit www.ehya.com.

 

The Securities Industry and Financial Markets Association brings together the shared interests of more than 650 securities firms, banks and asset managers. SIFMA's mission is to promote policies and practices that work to expand and perfect markets, foster the development of new products and services and create efficiencies for member firms, while preserving and enhancing the public's trust and confidence in the markets and the industry. SIFMA works to represent its members’ interests locally and globally. It has offices in New York, Washington D.C., and London and its associated firm, the Asia Securities Industry and Financial Markets Association, is based in Hong Kong.