OREANDA-NEWS. Fitch Ratings says the European high yield corporate bond market is exhibiting signs of maturing following several years of banking system de-leveraging and the "search-for-yield" in European fixed income. Notably, the rapid growth in 'highly speculative' single 'B' category issuance has slowed in 2015. While default rates remain low and Europe has little exposure to stressed commodity-related sectors, recent market volatility, diverging global monetary policy debates and the uncertain outlook for growth have added greater complexity to the outlook for the asset class.

Credit selection, particularly in the 'highly speculative' cohort of issuers rated 'B+' and below will be the key factor distinguishing performance into 2016 and beyond. Today, Fitch releases its latest EMEA Fitch 50, a compendium of 50 'B+' and below rated EMEA high yield issuers to help market constituents understand and interpret the elements that the agency considers when differentiating credit profiles and assigning Issuer Default Ratings (IDRs).

Fitch has updated the bi-annual EMEA Fitch 50 to focus exclusively on the 'highly speculative' 'B+' and below cohort of the European high-yield corporate bond market. Credits profiled include leveraged buyouts, restructured credits, dividend-related recapitalisations, highly-leveraged mid-market borrowers and European champions in niche domestic and international sectors. These represent the main sources of 'highly speculative' supply and constitute a complex mix of business profiles and financing structures.

This edition of the EMEA Fitch 50 includes an updated summary of notch-specific factors that the agency believes will add transparency to its approach to rating issuers at the lower end of the rating scale. These notch-specific factors, presented in table form, complement Fitch's Corporate Sector Ratings Navigators, which articulate the agency's approach to sector and credit-specific distinctions by rating category from 'AAA' to 'CCC'.

Specifically, in Fitch's view the following factors drive notch-specific outcomes at "highly-speculative" rating levels: business model, execution risk in management's strategy, volatility of cash flow, leverage and refinancing risk profile, governance and financial policy, and liquidity.

The summary analysis of each "highly speculative" issuer profiled in this report highlights its fundamental credit profile, including peer analysis, and financial performance and credit metric forecasts. In addition the profiles include corporate legal structure diagrams and Fitch's recovery tables listing assumptions and expectations for various debt instruments within the capital structure.

To provide further context for the relative positioning of issuers to each other and increased transparency surrounding the actual rating outcome, we have included issuer-specific Ratings Navigators and summary single 'B' category analytical tables for each of the key differentiating factors described above.

The report is available on www.fitchratings.com.