...Intense Search for Yield: European high yield (EHY) is benefiting from a scarcity of assets as savings exceed demand for investment in continental Europe. Further stimulus for yield- seeking from ECB asset purchases may also anchor current benchmark rates while improving headline GDP and credit spread performance. However, rising trade and capital imbalances in Europe may also reveal fragilities reminiscent of 2007, when excessive credit growth in unproductive fixed assets and consumption in the deficit economies led to a severe reversal. Diverging Markets and Sectors: Divergence between the US, UK, and continental European high-yield bond markets has become more pronounced. EHY credit spreads remain tighter than US counterparts, despite weaker growth, as differing monetary policy, currency and commodity price trends impact the performance of respective producer and consumer sectors. Debt Service, Enterprise-Value Cover: The low default rate and fundamental credit outlook for EHY remains...
