AFME is pleased to circulate its European High Yield and Leveraged Loan quarterly data report for the fourth quarter of 2024. The report provides detailed data and analysis on the issuance and credit performance for the high yield and leveraged loan markets.

Among the main findings of this report:

• European leveraged finance issuance (leveraged loans and high yield bonds) reached €118bn in proceeds in Q4 2024, a 57% increase compared to Q3 2024. This strong fourth quarter issuance contributed to European leveraged finance issuance reaching a record of €447bn for the year.

• High yield bond issuance totaled €37.7bn in Q4 2024, a 140% increase from Q4 2023, showing a full recovery after the pandemic drop of issuances.
  • In 2024, high yield bond issuance reached a total of €159bn in proceeds, the second-highest amount in our records, just below the 2021 amount.

• • In Q4 2024, the primary use of proceeds was refinancing, accounting for 54.2% of total issuance, followed by general corporate purposes (23.1%) and LBOs/MBOs (8.9%). On a full-year basis, refinancing represented 53.24% of total use of proceeds—the highest share since 2010, when it reached 64.14%.

• • In 2024, three sectors accounted for 60.9% of the high yield market by outstanding amount : Financial, Consumer Discretionary and Communications.

• Leveraged loan origination stood at €80bn in Q4 2024, an increase compared to the Q3 2024 amount (€42bn) and a 48% YoY increase. 
  • European Leverage Loan origination reached a record of €287bn for the year.

• • In Q4 2024, institutional spreads (3-month rolling average) tightened from 385.42 bps in October to 371.14 bps in December, while pro-rata spreads dropped more sharply from 348.5 bps to 280 bps. Institutional spreads remained above pro-rata spreads throughout 2024.

• • The Computers & Electronics sector emerged as the leading sector by loan origination amount in Q4 2024, while the Food & Beverage and Healthcare sectors saw significant declines compared to the previous quarter (respectively 92% and 50%).

• Credit Quality: S&P’s trailing 12-month speculative-grade bond default rate peaked at 5.1% in November—its highest level since March 2021—before declining to 4.5% by quarter-end. Moody’s reported a similar trend, with the speculative-grade bond default rate reaching 3.56% in November before falling to 2.59% by the end of the fourth quarter.
  • Moody's and S&P reported 4 bond defaults during Q4 2024, that were mainly due to distressed exchanges and missed payments.

• • According to Fitch, the European leveraged loan trailing 12 months (TTM) default rate stood at 4.1% in December 2024, down from 4.39% in December 2023.