Pain in Europe

Since the beginning of 2024, the number of corporate defaults by European issuers has been the highest since the financial crisis. We understand that this is mainly due to the real estate sector where the higher interest rates are biting and prices/volumes are under pressure. Unfortunately, this is only the start as companies have not yet been obliged to refinance at higher rates their wall of maturing debt. We therefore expect the number of corporate defaults to increase as overleveraged companies will inevitably face the higher interest burden. We focus instead on quality issuers at the current stage of the cycle.