Recession fears in Europe punish risky borrowers with higher yields

A powerful rally in risky financial assets has left behind Europe’s weakest corporate borrowers, with recession fears persisting in the region just as optimism grows about a US “soft landing”. ’s riskiest corporate bonds now have an average yield of 19.66 per cent, according to an Ice BofA index tracking regional debt rated triple C and lower. That translates into a spread — the premium paid by companies over government debt issuers — of more than 18 percentage points. By contrast, the lowest-rated US have an average yield of 13.47 per cent, with a much smaller spread of less than 9 percentage points. The difference between the two…