Euro High-Yield Bond Newsletter – 1H26

Euro High-Yield market demonstrated improving resilience during 1H26 as investor confidence gradually recovered following a volatile start to the year. Although cumulative issuance moderated to €63bn from €72bn in 1H25, improving financing conditions enabled a recovery in primary market activity during the second quarter, with refinancing remaining the dominant funding driver. Continued demand for BB rated issuers underscored investors preference for higher-quality speculative-grade credits, while tighter credit spreads and recovering market sentiment contributed to a positive total return of 1.8% in 1H26. As spreads normalize and valuations become increasingly compressed, future performance is expected to rely more on carry and issuer selection than on further broad-based spread tightening.