The same index measured by Barclays pan-European high yield registered yield of 5.
5%, lowest value for initially. Latest downward
strain on the European bond yields has been caused by the monetary action of Japanese central bank.
This caused flood of money to the larger yielding assets outside
Japan. The yields in Europe are purely supported by the easing stance of European Central Bank (ECB) and its particular commitment to execute outright monetary transaction involving
purchase of bonds of troubled governments, provided they make application for a
bailout. Though no government have come forward for a real aid, nevertheless the ECB backstop itself is
doing the job up to now. The existing yields on troubled South European economies’ bonds, Spain and Italy, are trading below 4%. This is often below the levels seen in Jul 2012, if the yields widened beyond 7%, an amount considered unsustainable in Europe. Alternatively, fundamentals do not have given any indications of improvement, as economies across Eurozone continue steadily to show weakness. The unemployment rate has been increasing for the Eurozone and for Greece it is actually similar to that people depression era in 1930s. Be it for virtually any reasons, the eased environment has allowed even the weakest credit to locate yourself in the bond market and reap the advantages of low interest. It’s
extended the debt maturity profile for corporate entities in
Europe.