LONDON — Leveraged finance issuance in Europe, Middle East and Africa (EMEA) in September will likely continue the solid momentum seen in the first half of the year after the market remained active in July, said Moody's Investors Service (Moody's) in an update to the markets published Tuesday. As expected, issuance slowed during the traditional August summer break.

Combined issuance in July and August increased by 50% climbing up to $26.2 billion, compared with $17.5 billion in the same period last year.

In the same time period, leveraged loan volumes continued to outpace high-yield bonds with $13.9 billion and $12.4 billion, respectively.

Loans also accounted for 78% of issuance in August with a more pronounced slowdown for bonds in the month.

Current leveraged bond and loan issuance volumes for the year stand at $170 billion, or 27% above the full year total for 2016, with leveraged loans making up two-thirds of issuance so far this year.

"While market activity levels remain high, potential monetary tightening on the back of reduced ECB asset purchases or rising US and UK interest rates could reduce demand and issuance volumes. Bond spread volatility, which has been reducing since the

ECB's decision to start asset purchases in March 2016, could kick up toward the end of the year," said Peter Firth, an Associate Managing Director at Moody's. — SG