Euro High-Yield Bond Newsletter – 9M26

Euro High-Yield market lost momentum in 9M 2026, as renewed inflationary pressures, ECB rate hikes and widening credit spreads weighed on issuance and investor returns. Bond issuance declined 18.5% YoY to €96bn, with BB rated bonds accounting for nearly 68% of total issuance, reflecting investor preference for relatively stronger credits. HY returns moderated to 0.2% in 9M 2026 from 1.8% in 1H 2026, as a negative 1.6% return in Q3 erased most of the earlier gains. Credit differentiation also became more pronounced, with CCC rated spreads widening 232 bps versus just 14 bps for BB rated bonds from early 2026 levels through September, highlighting growing refinancing concerns among weaker issuers. With borrowing costs remaining elevated, HY performance will increasingly depend on carry, cash flow resilience and disciplined credit selection.