Junk bond issuances soar to record high as demand surges

Michael Bow
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JUNK bond issuances have soared to a record high this year, as a surge in demand and the evaporation of bank lending sees companies tap investors in greater numbers.

Global high yield bond volumes have hit $254bn (£217bn) for the year so far, up more than 50 per cent on the $165.7bn raised last year, according to figures from Dealogic. Eurozone bond issuances are also at a record high, with $42.5bn raised since January versus a low of $243m in the depths of the financial crisis in 2008. And in the UK, $16.4bn has been raised in the market, nearly double the $8.5bn raised in the same period in 2012.

A mixture of low yields on government bonds and a pullback in corporate lending from banks due to regulations have forced investors into high yield, helping drive up demand.

Junk bond yields have plunged to historic lows in recent months, with yields falling as low as 4.97 per cent in May, according to the Barclays US High Yield Index.