Europe charges down the credit curve

Global Finance, Mar 2000 by Brandman, James

Lack of diversity in the European market is another concern.The concentration of issuers from the telecom, LBO, and acquisition finance sectors is a mark of the immaturity of the European market. "There is a lot of telecom issuance, but how much can you take on before you reach your sector limit?" asks Dustdar. "There's not enough sector diversification. " Pent-up demand on the buyside and lagging issuance volume creates a technical imbalance that in the long run could jeopardize the development of the European market. Ezrow disagrees: "Telecom is a pretty broad area. just because there's a meaningful correlation between the performance of cable companies TeleWest and NTL, doesn't mean that they are going to perform like a wireless company, a fixed-line company, Internet service providers, small telephony providers, or broadband carriers."

The benefits of the high-yield market over the loan market are clear: longer maturities, larger amounts of available capital, and a diversified investor base. Most market observers are predicting a sustained period of growth in European high-yield debt. But they're treading cautiously"The odds are we're probably going to have one great year, one pretty good year, and one bad year," says Ezrow."But I couldn't tell you in which order they're going to come,"

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