"Annus horribilis" is a term that is currently often used on the capital market for the investment year 2022, in which share and bond prices fell equally sharply.

The risk premiums for high-yield bonds also increased massively: For European bonds with the weakest credit rating (C bonds), they even doubled.

Martin Hock

Editor in Business.

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So it's no surprise that the bond business for small and medium-sized companies wasn't exactly booming.

The financial communication company IR.on counted 23 emissions in 2022 in their annual market study, which the FAZ has received in advance.

It's the second-lowest number since the survey began in 2012. Only 2016, when no one wanted to know about middle-market bonds, saw 16 issuances fall.

Volumes hit an all-time low.

Even the issuers only wanted to collect around 800 million euros and only got 589 million in the end.

That was around half as much as in the previous year and not even two-thirds of the total for 2016. Only the coupon increased, and not too little.

Whereas in previous years this averaged just over 5.5 percent, last year it reached 6.77 percent.

Still, the rise is contained, given that B-bond yields doubled in 2022 and C-bond yields rose even more.

At EUR 148 million, the default volume did not reach any record levels.

However, nine bonds from eight issuers were subject to restructuring, such as extensions to maturities or interest rate adjustments.

The total volume involved was 690 million euros.

That was 11.5 times the previous year's value and still twice as much as in 2021.

The eight issuing houses surveyed by IR.on expect coupons to continue to rise in the new year, primarily due to higher interest rates, but also because investors are demanding higher risk premiums in what continues to be a difficult market environment.

The number of emissions will therefore not recover either.

Slight recovery for hybrid bonds

Activity on the European market for hybrid bonds also collapsed last year.

With only 12 billion euros after 40 billion in the previous year, the issue volume had fallen to the lowest level since 2017.

For the current year, the rating agency Scope is forecasting a slightly higher volume of 15 billion euros, after the year started with a few larger issues full of hope.

Eurofins, Enel, Energias de Portugal and Iberdrola have issued hybrid bonds with a total volume of 4.35 billion euros.

However, high coupons for the callable perpetual bonds would deter some companies in the real estate industry, for example, says Azza Chammem, senior analyst at Scope.

Terminations at the first possible date are also less likely, since the refinancing costs are often higher than the higher coupons to be paid if this option is missed.