Hybrid bonds grow in appeal in Europe
Corporate borrowers are benefiting as QE measures suppress yields across the region, encouraging investors to relax their standards.
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THE appeal of risky debt is deepening in Europe, even as credit quality slides and compensation shrinks.
The balance has shifted in favour of companies, which are on pace to sell a record amount of hybrid bonds this year. Non-financial borrowers have already issued more than 19 billion euros (S$26 billion) of the low-ranking notes following 28 billion euros in 2014, according to data compiled by Bloomberg, and analysts are upping their forecasts.
Borrowers are benefiting as quantitative easing (QE) measures suppress yields across the region, encouraging investors to relax their standards. Average ratings on hybrid bonds, which combine elements of debt and equity, fell to the lowest in eight months in February, according to CreditSights Inc.
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