Additionally, default rates remain relatively low. According to Moody’s Investor Service, European speculative grade debt default rates declined to 2.5% in the first quarter from 3.7% at the end of 2013.
While there are no Europe-focused speculative-grade debt ETFs on the market, investors can still access European high-yield bonds through international bond ETFs with heavy tilts toward European countries.
For instance, the Market Vectors International High Yield Bond ETF (NYSEArca: IHY) includes a 10.5% exposure to U.K., 9.3% to France and 9.2% to Italy. IHY has a 0.40% expense ratio and a 4.4% 30-day SEC yield.
The SPDR International High Yield Bond ETF (NYSEArca: IJNK) top European country weights include Italy 14.5%, U.K. 10.7% and Germany 10.0%. IJNK has a 0.40% expense ratio. The fund began trading on March 12, 2014. [ETF Spotlight: International Junk Bonds]
Top country holdings in the iShares Global ex USD High Yield Corporate Bond ETF (NYSEArca: HYXU) include France 14.3%, Italy 14.1% and Luxembourg 12.5%. HYXU has a 0.40% expense ratio and a 3.07% 30-day SEC yield.
For more information on bonds, visit our bond ETFs category.
Max Chen contributed to this article.