EMEA leveraged finance issuance hits record high; equity volatility risk looms


LONDON — Leveraged finance issuance in Europe, Middle East and Africa (EMEA) reached a new January high fuelled by new issuers' entry into the market, said Moody's Investors Service (Moody's) in an update to the markets published Tuesday. However, February issuance could potentially slow on the back of rising stock market volatility.

Leveraged loan issuance volume reached $22.4 billion in January 2018, posting a new record for the month and exceeding January 2017's $19.4 billion by 16%. High-yield bond volume, at $9.9 billion for January 2018, is up 12% on the $8.9 billion in January 2017. However, in contrast to the leveraged loan market, this does not represent a new record for the

high-yield bond market.

"January 2018 issuance volumes were buoyed by a record number of new issuers for the month, highlighting the continued issuer-friendly market

environment and investor appetite to take on riskier investments," said Peter Firth, an Associate Managing Director at Moody's.

"Issuance could slow somewhat in February as equity market volatility may spill over into leveraged finance issuance activity. Transactions could be delayed or postponed and we expect the high-yield bond market to remain more susceptible compared with leveraged loans," added Firth.

Overall risks to the strong market momentum also remain, such as rising interest rates and tightening monetary policies across the US, UK and Europe. — SG