European high yield
Strategists Gary Jenkins and Jim Reid at Deutsche Bank in London explain why they have changed their recommendation on European high yield to neutral
European high yield has performed exceptionally well in the first few months of 2006. In spread terms, the euro high-yield index (excluding GM and Ford) has tightened some 70bp and the year-to-date excess return over government bonds is close to 5.5%. The key reasons for this performance have been the continued low default rates and the rise in event risk for investment-grade credits, which has led to further demand for the less event risk-sensitive high-yield market. Indeed, the past couple of
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