In a new special report, Fitch Ratings details the extent of unrated corporate bond issuance in the EMEA region over the past three years
As a proportion of the overall bond issuance in the EMEA region, unrated issuance has remained at around 10% during that time. This confirms Fitch's belief that the market for this issuance is capped at these levels by both a lack of depth of demand from retail investors and by institutional investor constraints. Other factors such as the limited liquidity of unrated bonds and lack of benchmarking also lie behind the limitation on the extent of unrated issuance the market will accept.
However, the report also finds that credit quality is unlikely to be the key driver for the lack of ratings assigned, with an illustrative plotting of broad financial data for the issuers. For a selection of the largest issuers, including Safran SA, SAP AG, Vasakronan, Seadrill, Neste Oil, Galeries Lafayette SA and Hochtief AG, the report also lays out a graphical mapping of the issuers' current profiles against its sector-specific guidelines for their respective industries.
The report is available at www.fitchratings.com or by clicking on the link above.