High yield has long been a profession dominated by Americans. Ever since Mike Milken popularized the industry in the 1980s, the U.S. junk bond market has been bigger and more heavily staffed than its counterpart in Europe. Slowly, however, Europe is catching up.
Last year, high yield was one of the hottest hiring areas for banks in London. In July 2013, year-to-date European high yield bond issuance was up 95% on the same period of 2012 according to information provider Dealogic. Banks responded by poaching the best high yield talent: Knight Capital, HSBC, Lloyds, SocGen, Citi, Jefferies, Mizuho and BNP Paribas all hired. So did hedge funds like Moore Capital and brokerage firms like Cantor Fitzgerald and Gottex. A game of musical chairs ensued.
This year, headhunters working in the high yield space say hiring in Europe has calmed down a lot. And yet, it's not dead entirely. SocGen hired three London-based directors of high yield sales in January and Deutsche Bank might have some holes to fill in its European team. Andrew Jarman, the ex-head of high yield trading at the German bank, left in March. Romaine Rachidi, a high yield trader whom Deutsche hired from Morgan Stanley in June 2012, returned to Morgan Stanley in September 2013 and allegedly hasn't yet been replaced. "It's still a bit early for movement," says one headhunter, speaking on condition of anonymity. "You might see something happen once bonuses have all been paid, but banks might make do with moving people internally rather than going to the market."
However moribund the European high yield market is, U.S. high yield professionals have good reason to cast their eyes over the Atlantic. As the charts below from Dealogic show, U.S. high yield bond issuance is down 21% year-to-date compared to 2013. By comparison, European high yield bond issuance is up 13%, to a record high of $40bn. In 2012, the U.S. high yield market was 3.5 times larger than Europe's. Right now, that gap has been closed to just 60%.