FTSE Russell's Sandrine Soubeyran: Too soon to wave goodbye to Euro high yield credit

Number of defaults in Europe falls

Euro high yield (HY) credits have outperformed Euro investment grade (IG) corporate bonds, and those of other regions, since the beginning of the year.

As Table 1 shows, the FTSE Euro High Yield Bond index was up 1.3% and 6.5%, respectively, in July and year-to-date, compared to 1% and 3.4% for the IG equivalents, while credits in other regions were modestly higher or lower. So why did Euro high yield credit outperform, and can this outperformance continue? Table 1: Euro HY have led the corporate bond rally in July and YTD  Chart 1 shows Euro high yield bonds have followed Eurozone equities higher over the last 12 months, with much of the increase seen since Q2 2023, while the performance of investment grade corporate bonds was ...