High-yield junkies

Just last year it seemed as though fallen angels were going to cripple the European high-yield market’s potential. Trading large and liquid, they now look like the sector’s unlikely saviour. Oliver Holtaway asks what role fallen angels might play going forward

When a €38 billion raft of fallen angels crash-landed into the European high-yield market last year, the immature market went through a volatile, uncertain phase. High-yield investors were suddenly swamped with unfamiliar-looking paper, while those fallen angel investors who were not compelled to jump ship when their credits fell to junk found themselves in uncharted territory.

Up to €15 billion worth of fallen angels are expected this year, but the picture now looks very different