The sun is out and the summer slowdown seems to have come early. Before looking at primary, we thought Deutsche Bank’s default study made some interesting reading, with the research team expecting EU speculative grade defaults to peak at 5.8% (Q4’24) which compares to 12.2% during the Global Financial Crisis. Looking under the hood of EU “speculative grade”, the team see peak defaults of 4.4% in EU HY and 7.3% in EU loans. 

EU HY and EU loan defaults are set to come out lower than the US due to “1) more BBs in EU HY bonds & 2) lower B default rates, due to greater European fiscal support & less leverage in frothy sectors such as Tech”.