Craig Nicol
Managing Director, Head of Global Credit Strategy
Owain Griffiths
Partner, Head of Capital Solutions
Executive Summary
Many European corporates overextended their borrowing capacities during the era of cheap post-GFC capital, leaving bloated capital structures now straining under higher financing costs. Over the past three years, this has produced four of the five largest defaults ever in the European high yield market.
Unlike prior cycles, this one has proven persistent — and index-level spreads mask a rapidly rising level of dispersion beneath the surface. Structural inefficiencies in both the loan and bond markets are compounding the problem, even as abundant capital continues to flow in.
At its core, our view is simple:
A structurally inefficient market is about to meet its next wave of refinancing needs — and that combination is creating one of the most persistent opportunity sets we’ve seen in years.
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