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High-yield bond volumes of $6 bln were down from $16 bln in January, and $11 bln in February 2014 as larger M&A-driven activity subsided, despite the announcement of quantitative easing in Europe, Moody’s said. In addition, the rating agency downgraded 16 Russian corporates following the sovereign action, causing the downgrade-to-upgrade ratio to increase in the region.

“Although high-yield markets have seen renewed capital inflows that improve market liquidity, capital inflows did not translate into increased primary activity in February”, said Peter Firth, Moody’s Associate Managing Director.

“However, the pipeline for mid-March has begun to fill with a number of sizeable refinancing-driven deals”, added Firth.

The downgrade-to-upgrade ratio rose in February 2015 following a large number of negative rating actions on Russian corporates, but Moody’s does not expect a broad weakening of aggregate credit quality among EMEA corporates in 2015.

Market access at the bottom of the rating scale at B3 and lower is not a given, despite good liquidity in the market. Issuance remains firmly at the B2 and higher rated level, with no lower-rated issuers accessing the markets in February. Investors continue to discriminate for credit quality and raise concerns about the most aggressive deal terms.

The challenge for concerned investors lies, however, with the QEfuelled spread compression and improving market liquidity, which could lead to deals with weaker credit profiles and weaker covenants still being completed.