Māris Kreics, Chief Financial Officer of Eleving Group

According to the data from J.P. Morgan, the largest U.S. investment bank, in June 2025 the European corporate bond market saw a record-high volume of high-yield bond issuances. The total monthly volume in this segment reached EUR 23 billion, passing the previous record set four years ago, in June 2021; yet it was about EUR 5 billion lower compared to June this year.

Analysing the causes, we can see a swift and deliberate shift of capital from the U.S. to European capital markets in the high-yield bond segment within a very short period, at least in the short and medium term. This was driven by investors’ quick reaction to the myriad statements made by the U.S. president regarding changes to trade tariffs, as well as growing concerns over the size of the U.S. government debt.

For companies in Europe, especially those issuing high-yield bonds, this opens the door to financing opportunities, and the companies may finally proceed with refinancing as the market conditions turn favourable. The spread between high-risk bond yields and safe government bond yields has narrowed from 4 percentage points in April this year to 3.1 percentage points in June, according to the Ice BofA data. This might be an indication that investors have become “less selective” and are more willing to invest in riskier securities, while also accepting lower returns in exchange. Additionally, there is now a much larger pool of available capital, which has reduced competition for funding among high-yield bond issuers. Given the current market situation, Eleving Group is also evaluating the possibility of refinancing EUR 150 million worth of bonds in the second half of the year.

Looking at the Baltic market, we also see a fairly high level of activity, although the market conditions are quite different. According to the Signet Bank data, last year more than EUR 3 billion worth of bonds were issued in the Baltic states, both publicly and privately, with almost EUR 700 million issued in Latvia, nearly EUR 760 million in Lithuania, and EUR 1.698 billion in Estonia. By the end of June this year, the volume of bond issuances across the three Baltic countries had already exceeded the total amount issued in all of 2024. However, in the Baltic capital market, we are mostly talking about the activity of local issuers and local investors, with the effect of global processes being much less significant. In recent years, the local companies have learned to raise funds outside the traditional bank loan segment, and an increasing number of individual investors have become familiar with this asset class.

The activity in the Baltics may be perceived very positively; however, it is important to bear in mind that we have not yet experienced a situation where a public bond issuer fails to meet its obligations. This can create a false impression that all bonds are risk-free–be it government securities, investment-grade corporate bonds, or high-yield bonds. Therefore, more effort should be made to explain what investing in bonds means, how different types of bonds vary, and what factors should be evaluated when making an investment decision.

Individual investors should pay attention to whether bonds are secured or unsecured, subordinated or unsubordinated, and whether they are issued by the company itself or by a subsidiary whose balance sheet contains assets that could serve as a source of funds in the future if the issuer itself is unable to meet its obligations. Also, they should look at the company itself and its financial data-evaluating its historical track record in the capital markets, whether it has been assigned a credit rating by any of the major credit rating agencies, the structure and experience of its management team, and the company’s medium-term development strategy. From an investor’s perspective, a positive factor is that the bonds issued in the Baltics offer very attractive rates, better than what we currently see in the European market. Moreover, for the local investors–especially the novice ones–investing in local companies is much easier and more understandable.

Overall, assessing the situation in the bond market–for large and profitable companies operating with high-yield bonds, the European market currently offers the opportunity to raise capital at significantly better rates than in the Baltic market. At the same time, local investors should take advantage of the very attractive yields currently available in the Baltics, which in the longer term may decrease, aligning with European levels.