€HY is getting greener !

Market trend Total return : Broad market correction hit both € and $HY by 1.0% and 0.7% respectively. In the US longer duration assets suffered from the inflation narrative - $BB underperformed $B and $CCC. Primary market was pretty active given the market context. $46bn issued in September in US$ HY, and €5bn + for the €HY market. Fund flows : net outflows over the past 5 weeks in €HY , although moderate (-€630mn), while US H Y funds managed to attract net money (+$650mn) despite the market turmoil. Default rates : Rolling 12-months default rates in Europe are again lower than in the US – c ontinue to decline further reaching 2.5% in the US and 2.4% in Europe . Valuation : our econometric models point towards the cheapness of the €HY market . Ev en taking into account an expected increase in defaults with the end of the central banks’ support measures, we see 20bp of tightening potential before end-March 2022 . This month’s main topic Performance of green and sustainable bonds in €HY Corporate news of the month Biogroup Q2FY2021 results were solid with good prospects for continuing PCR testing Others : Cerba, Synlab, Amedes, Eurofins, Faurecia, Harbour Energy , Altice, Iliad