Credit Strategy - Europe: European CreditBook: Another half to go

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Credit Strategy - Europe: European CreditBook: Another half to go

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Credit Strategy - Europe

European CreditBook: Another half to go

First half highlights 02 July 2026

Event risk has been the theme of the first half. Remarkably, credit has taken Middle East Credit Strategy

conflict, higher inflation, more tariffs and central bank hikes in its stride. Total and Europe

excess returns for every single Euro IG sector are positive YTD. The only Euro HY sector Mohit Agarwalla

with negative total returns this year is Tech. We think attractive yields in credit are Credit Strategist

partly shielding the market from the wave of event risk. Investor tendency to add MLI+44 (UK)20 7996 1027

exposure during spread weakness has been a powerful backstop to the credit market. mohit.agarwalla@bofa.com

What next for central banks? BarnabyCredit StrategistMartin

The key question now revolves around the global hiking cycle. With a “peace deal”, MLI+44 (UK)20 7995 0458

falling oil prices and Eurozone inflation surprising to the downside; this feels enough to barnaby.martin@bofa.com

keep a lid on Euro rates vol for now. This should be good news for continued Euro IG Ioannis Angelakis

credit inflows. In HY, there has been a bifurcation of flows between Euro/Global- CreditMLI (UK)Derivatives Strategist

focussed HY funds, and US-focussed HY funds. We think this outlines greater US +44 20 7996 0059

ioannis.angelakis@bofa.com

concerns over private credit, software and the AI buildout, than in Europe.

‘Tis the season (for summer slowdowns)

Non-stop primary has meant that Euro credit issuance has continued to beat historical Download the Excel

records. Every month this year, except March, primary activity has been stronger than CreditBook

historic medians.