European Junk Bonds Falter at QE's Fault Line

It's a corporate bond party. The U.S. had a stellar January for new sales, and issuance in euros is off to a rip-roaring start for 2017, with 161 deals totaling 172 billion euros ($185.6 billion). Yet if you filter out the high-grade noise all is not right in the state of Europe. And the European Central Bank has its fingerprints all over it.

The ultimate aim of all the ECB's herculean efforts on quantitative easing is to breathe life into the lending market, principally to those companies starved of capital. The high-yield corporate bond market provides a window into the health of capital flows for the most vulnerable borrowers, as it has a public face that's missing from Europe's bank-dominated corporate lending market. It's always been the poor relation to the much bigger U.S junk bond market, but the disparity is growing.