Octus on Credit: New paper scarcity: Hairy refinancings, investors peril

Chiara Elisei, Chief Credit Correspondent

European high-yield bond supply has been sluggish in recent weeks, with only a handful of new deals. This scarcity has allowed some of the more challenging credits—such as Rekeep—to access the market.

Meanwhile, bonds of other stressed issuers like Graanul have rallied to the mid-90s as investors grow more confident in the Estonian wood pellet manufacturer’s ability to refinance. This optimism comes despite significant demand uncertainty caused by the U.K. government’s post-2027 subsidy framework for biomass energy

The performance of several bonds issued in 2024 serves as a stark reminder for investors deploying capital. Italian recycled cartonboard manufacturer Reno de Medici’s 2029 bonds have fallen to the low 80s after the company was forced to upsize its RCF due to liquidity concerns. Similarly, Spanish auto supplier Antolin’s notes have dropped to the low 80s amid cash burn, prolonged weakness in the automotive sector, and risks from U.S. tariffs.

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