New High Yield Markets

Abstract

Abstract Some of the developing (non‐US) high‐yield markets were briefly mentioned in the previous chapter, but before the development of the non‐US markets for high‐yield bonds is addressed in this chapter, the countries from which national and corporate borrowers were driven to the US markets for capital are reviewed. They represent the full spectrum of size, location, and creditworthiness, and include Argentina and Brazil (which accounted for nearly 90% of all high‐yield bonds issued in the USA by South American Corporations in the 1990s), Canada, Australia, and the UK. The next section of the chapter reviews the development of the European high‐yield market, the expansion of which peaked in 1998 but then paused (and showed a drop in returns) following the Russian crisis. Data are given contrasting the different European financial systems, and difficulties arising from the different European insolvency regimes and transnational bankruptcies are discussed. The last part of the chapter discusses the development of the Canadian high‐yield market, and the attempts made to break through into this market in Asia, which are limited by cultural taboos against bankruptcy (data are given on the different creditor rights in eight Asian countries and four South American countries).