Felicity Juckes Warns: Avoid Europe's Riskiest Debt
Felicity Juckes, a seasoned portfolio manager, has advised investors to steer clear of triple-C debt due to the significant conviction required in assessing enterprise value and recovery rates. This warning comes amidst a lukewarm performance of European triple-C debt and a string of contentious restructurings that have left investors disgruntled.
In 2025, European triple-C debt has barely returned any profits, contrasting sharply with other rating groups that have seen returns exceeding 4%. The lackluster performance is partly due to aggressive restructuring deals that often favor majority lenders at the expense of investor rights. Notable examples include Selecta Group and Victoria Plc, which left a bitter taste with investors.
Borrowers, particularly those backed by private equity, are attempting to insert clauses in debt sales that hinder creditors' recovery efforts. Meanwhile, default rates may be underreported due to the increased use of liability-management exercises, according to Joop Kohler of Robeco Institutional Asset Management. In the loans world, triple-C borrowers' total returns are down 1.8%, while single B borrowers' returns stand at 4% so far this year.
The dearth of interest in Europe's riskiest credits is evident in the niche Nordic market, where only one company, Flora Foods, has sold CCC-rated debt in 2025.
The waning appetite for Europe's highest-yielding debt risks spiraling into a vicious cycle of higher borrowing costs and more restructurings. Investors, heeding Felicity Juckes' advice, are actively avoiding Europe's riskiest credits, citing recent fractious restructurings and the need for strong conviction in assessing enterprise value and recovery rates.
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