The Report contains European leveraged finance market trends for the second quarter of 2022, which includes issuance and credit performance figures for the high yield and leveraged loan markets.

Key highlights:

• European leveraged finance issuance accumulated €49.3 billion in proceeds in 2Q'22, a 14.9% quarter-on-quarter (QoQ) decrease and a 59.7% year-on-year (YoY) decrease.
• High yield bond issuance totalled €11.2 billion on 32 deals in 2Q'22, a 33% decrease from €16.7 billion in 1Q’22 and a 77.3% decrease from €49.4 billion in 2Q’21.
  
  The proportion of USD-denominated issuance decreased to 12.1% of all issuance in 2Q'22, down from 22.3% in 1Q’22 and from 26.6% in 2Q’21.
  
  The leading use of proceeds for high yield bond issuance in 2Q'22 was general corporate purposes, at €6.3 billion, which was higher than €3.6 billion in 4Q’21 but lower than €15.3 billion in 2Q’21.
  
  Preliminary data for 3Q’22 indicates that high yield bond issuance will continue to be subdued with only €3.4bn in bond supply (as of mid-September). This would represent the lowest quarterly amount since 1Q’09.
• Leveraged loan issuance including first lien, second lien, and mezzanine financing, totaled €38.1 billion in 2Q'22, down 7.6% from €41.2 billion in 1Q’22 and down 47.7% from €72.8 billion in 2Q’21.
  
  26.8% of deals financed in 2Q'22 were issued for refinancing and/or repayment of debt, down from 40.2% in 1Q’22, and from 63.8% in 2Q’21. LBO/MBO was the second largest use of proceeds in 2Q'22 with €8.9 billion, followed by Acquisitions with €7.1 billion.
• Credit quality: S&P reported the trailing 12-month speculative-grade default rate at 0.9% in June 2022, a decrease from 4.7% in June 2021. Moody's reported the speculative-grade default rate at 1.7% in June 2022, down from 4% in June 2021.
  
  There were 7 bond defaults reported in the 2Q’22 by Standard and Poor’s and Moody’s. The reasons were missed interest payment and distressed exchange.
  
  Fitch reported a decrease in European Leveraged Loan default rates (by value) to 0.4% in June 2022 from 1.9% in December 2021.