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The Bank of England suggests a resurgence in high yield & leveraged finance 2028

If you work in UK high yield or leveraged finance and you're concerned about your job security, then hang in there. After a terrible year for both markets in 2023, today's Financial Stability Report from the Bank of England suggests things will improve. But you might have to wait a few years.

High yield issuance plummeted in 2023. At the mid-year point, it was down 57% in Europe versus 2022 according to data from Fitch ratings. Similarly, European leveraged finance issuance fell 24% year-on-year in the first nine months versus a weak 2022 according to Dealogic. 

As a result, after a flurry of hiring earlier in the year as banks like Citi (which hired Carles Jou from Goldman) and Jefferies (which hired Alessandro Mazza from Morgan Stanley) added senior staff, headhunters say London high yield origination and leveraged finance hiring is now in the doldrums. As banks look to cut jobs, it's people in these teams who are most exposed to being laid off. 

In a few years' time, however, everything could change. As the chart below from the Financial Stability Report shows, there's plenty of high yield and leveraged finance debt maturing in the coming years, with high yield refinancing in particular surging in 2028 and leveraged loan refinancing surging from 2026.

Source: Bank of England

The implication is that high yield bankers who survive the end of year cull (for a few years) might be fine. Whether these jobs will be in banks in future is another question, though. Speaking off the record, one headhunter said bankers in both areas are moving into the private credit market instead. Accordingly, the Bank of England noted that private credit has grown massively in recent years and the issuance is shifting to private credit investors who are repackaging loans as CLOs.

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Photo by kelvin balingit on Unsplash

AUTHORSarah Butcher Global Editor

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