It’s in the post

Author: | Published: 4 May 2011

Do high yield investors read the news? During the first few months of 2011 it was tempting to believe they didn't. Through unrest in the Middle East, Libya's revolution, Japan's earthquake and the continued sovereign debt crisis, the numbers of deals continued to rise, unhindered by international calamities. While global events battered equity market sentiment, high yield ploughed on, reaching record levels.

The bonds enjoyed the strongest start to the year on record, with $103 billion sold globally in the first three months following a record 2010. Thirteen deals from April 1 to April 14 meant $32.2 billion worth of European bonds were issued in the year to that date, according to data from Dealogic. That's 80% more than was issued at this point in last year's record-breaking tally.

But despite these volumes, high yield is in a state of conflict. A letter – seen only by IFLR and...