High-Yield Team

Credit awards 2002

Provide an example of a new approach to analysis or a value-added service that you have introduced over the past year.

The major addition to our research armoury in the past year has been our European High Yield daily research product, which aims to provide immediate incisive analysis of key credit news. The daily responds to the ever-increasing needs of our clients for prompt opinions on important events.

Name one of the instances when you have been proud of your team over the past year.

There is little doubt that 2001 was a challenging year. The team kept pace with a rapidly-changing market and expanded its analysis of special situations and distressed investment opportunities. We have further built our already-strong credit infrastructure, as this is the pillar that adds value for our clients over the short and longer term.

What is one of the issues in the sector that keeps you up at night?

The impact of fallen angels on the market is one of the most important issues. Although these companies often benefit from name recognition and may offer substantial opportunities, they are mostly in very precarious financial situations with a negative profit outlook that puts them a single event away from a restructuring. Their inclusion in high yield indices may increase the volatility of returns and increase the specific risk of the index (or a similarly invested portfolio). The European market still needs a continuing supply of well-positioned, sensibly leveraged issuers with positive cash flow momentum in order to improve its balance.

The high yield market has changed, how has your team changed?

The increased opportunities in special situations and distressed debt convinced us to increase our dedicated coverage of these credits. We continue to increase the co-ordination between our London and New York teams, in view of the client demand for special situations and distressed debt.