White & Case’s study on leveraged loans and high-yield bonds sees Europe’s core countries expand and recover in debt terms, while emerging markets across the board start to realize the potential of leveraged debt.

Western European markets led the continent’s recovery in leveraged loan and high-yield bond activity in 2014, as confidence returned to investors. French leveraged loans, for example, increased to 26 to 42 in 2014 year on year, while the UK & Ireland saw 74 high-yield bond issuances, up from 62 in 2013. Elsewhere, in the Nordics, high-yield bond issuance rose to 37 in 2014 from 10 in 2013, and leveraged loans climbed to a total of 24 last year, compared with 16 a year previous.

Southern Europe’s recovery

Another notable trend in European issuance was the return to the market of big issuances from crisis-struck countries Spain and Italy. Spanish leveraged loans, for instance, surged in value in 2014, from €2.48bn in 2013 to €13.42bn in 2014. Much of this was garnered from two large deals; the €4.5bn refinancing of construction firm FCC and pharma company Grifols’ €4.1bn debt repayment in March. Elsewhere, Italy’s high-yield bond market also saw a big increase in value, with issuances worth €13.23bn in 2014 compared with €9.54bn in 2013. This was aided by some large issuance, including telecoms operator Wind’s €3.75bn issue.

Emerging prospects

Developing markets are also picking up the leveraged debt bug. In Central and Eastern Europe, for example, €10.66bn-worth of leveraged loans were issued in 2014, compared with just €6.31bn in 2013. Away from Europe, the Middle East’s traditionally bank-dominated market has slowly started to erode as the sukuk capital market becomes more robust. In Asia, convergence could be on the capital market agenda, however certain geography-specific factors, such as individual currency controls and cultural barriers, add to the region’s challenges and opportunities.