High-risk European borrowers refinance into cheaper fixed-rate bonds
Updated
Updated · Bloomberg · Apr 30
High-risk European borrowers refinance into cheaper fixed-rate bonds
7 articles · Updated · Bloomberg · Apr 30
In recent weeks, more junk-rated issuers have tapped Europe’s deeper, more liquid fixed-rate market as all-in borrowing costs fell below floating-rate products.
The move lowers financing costs and shields companies from potential increases in interest rates as markets now price in three European Central Bank rate hikes this year.
Before the outbreak of war in the Middle East, markets expected no ECB hikes this year, and the shift is typically seen as a precursor to higher bond coupons.
Are companies miscalculating by locking in high rates if the ECB's rate hike fears are actually overblown?
As firms hedge against rate hikes, could the hidden 'LASH' risk trigger Europe's next major financial crisis?
With Belgium's debt crisis looming, which other European nations are quietly becoming the next big risk for investors?