Asian Investment Bank Piles Into
European High Yield
By GILES TURNER
Europe’s high-yield bond market is bubbling away nicely. Investors are pouring in, companies are issuing debt in record amounts, and rating agencies are issuing warnings. Now a new investment bank is looking to plant its flag.
Hong Kong-based investment bank and distressed debt investor SC Lowy is to launch a high-yield bond platform in London, aiming to tap into the booming European market.
Hussein Nasser, a former head of European Corporate Credit Trading at Japanese bank Nomura, has joined in the new position of head of European bond trading, according to a statement.
The firm already has an office in London, focusing on distressed bond trading, loans and advisory. With a current headcount of 12, SC Lowy hopes to hire around five new employees a year over the next three years.
The European high-yield market began the year with a bang, with volumes increasing for the third consecutive first quarter to $40 billion, reaching the highest first quarter volume on record, according to data from Dealogic.
Although the boom is a sign that the European Central Bank quantitative easing program has given a boost to debt markets, market participants are still spooked by the lack of liquidity.
In March this year, ratings agency Fitch also warned that tolerance in extremely low-rate borrowing conditions currently enjoyed by European high-yield borrowers was reminiscence to the run up to 2008.
Michel Lowy, Co-Founder of SC Lowy, said: “We believe that a niche player with specialist expertise, a flexible approach and strong balance sheet can succeed in an illiquid market in which regulatory reforms have forced the bulge brackets to retreat.”
The expansion into Europe follows a period of regional expansion in its home market. Last year SC Lowy, alongside Korean private equity fund Yull PE, bought a majority stake in South Korean Shinmin Mutual Savings Bank.