Euro-Zone Deflation Risk Remote, Says ECB, page-8

Debut Bond Sales Swell in Europe as Risks Mount: Credit Markets

By Abigail Moses and Jennifer Joan Lee  Jun 25, 2014

Companies are debuting a record amount of bonds in Europe as investors demanding higher yields show greater tolerance for untested borrowers who are seeking to diversify funding as banks curtail lending.

Finnish insulation maker Paroc Group Oy and French car parts distributor Autodis SA are among 54 first-time issuers that sold 20 billion euros ($27 billion) of notes this year, compared with 40 companies selling 14 billion euros in the same period last year, according to data compiled by Bloomberg. More than 75 percent were either unrated or below investment grade, with more than half of those ranked B or lower.

“Issuers can sell anything they want and it’s getting bought,” said David Newman, the London-based head of global high yield at Rogge Global Partners, which manages $55 billion. “Worse and worse credits are coming to market.”

Increasing demand for riskier securities has prompted warnings by policy makers that easy money is encouraging investor complacency and leaving markets vulnerable to a swift reversal. Yields on company bonds in Europe slumped to lows this month after the European Central Bank cut its benchmark interest rate to 0.15 percent..

http://www.bloomberg.com/news/2014-...-in-europe-as-risks-mount-credit-markets.html

This is what happens when central bankers over-manipulate markets. They create market distortions and investment misallocations that ultimately increases financial and systemic risks.

The race for yield has investors chasing ever-dodgier risk assets until they're out-biding each other for 'bottom of the barrel' junk debt.

One man's junk is another man's treasure....as one man's meat is another man's poison.