BlackRock, Goldman See Europe’s Junk Issuers Pivot to Bonds
- BMC, Merlin opt for bonds over loans for M&A, liquidity
- Loan issuance trails behind since primary market reopened
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Goldman Sachs Group Inc. and BlackRock Inc. predict Europe’s most indebted companies will shift their money raising toward bonds and reduce reliance on loans in the post pandemic world, echoing the last financial crisis.
The move to bonds will largely reflect investor demand as fixed income funds have seen seven consecutive weeks of inflows since the credit-market crash earlier this year. At the same time, issuance of collateralized loan obligations -- bonds backed by leveraged debt -- has slowed to a trickle, hobbling a market that typically absorbs half of new loans to European companies.