(Bloomberg) -- Europe's corporate-bond market may be closed for weeks as investors and companies try to divine the implications of the U.K.'s decision to quit the European Union.
There's unlikely to be any investment-grade sales until the middle of next month, according to both ABN Amro Group and UniCredit. The high-yield market may take even longer to reopen after credit risk surged and European currencies slumped following the Brexit vote.
"There are never new high-yield issues when the market is volatile like this – never," said Olivier Becker, a Paris-based fund manager at Oddo Meriten Asset Management, which oversees 46 billion euros ($51 billion). "I don't expect new issues to come back until September."
"Investments are going to be on hold," said Andrew Wilmont, head of European high-yield investment at Neuberger Berman, which oversees about $257 billion.
Concerns about the Brexit vote have already depressed corporate-bond sales in Europe, with this week seeing the lowest euro issuance since February. The year-to-date total is also down 7%, even after the European Central Bank's stimulus program pushed borrowing costs toward record lows.
The "leave" camp's win in the U.K. referendum rattled markets as investors worried about the potential for wider political instability and an economic slowdown. The Bank of England and International Monetary Fund both said before the vote that a Brexit could disrupt trade and economic growth in the U.K. and the rest of Europe.
"We will probably see no issuance for a few weeks, until there is some stability," said Andrew Wilmont, head of European high-yield investment at Neuberger Berman, which oversees about $257 billion. "Investments are going to be on hold."
Germany-based Adler Real Estate postponed a sale of convertible bonds last week citing investor uncertainty caused by the U.K. referendum. Brown-Forman, the maker of Jack Daniel's whiskey, met investors earlier this week to discuss a potential bond sale in sterling, euros or both. The Louisville, Ky.-based distiller didn't immediate reply to an e-mail and phone call outside office hours on Friday seeking comment on whether the sale will go ahead.
CDS SURGE
The Markit iTraxx Europe index of credit-default swaps on investment-grade companies surged the most in almost eight years on Friday. A gauge of swaps on sub-investment grade companies jumped by the most since October 2014.
Companies have raised 185 billion euros in bond sales this year, according to data compiled by Bloomberg. Luxury-goods maker Christian Dior was the only non-financial issuer to sell notes in the single currency this week, raising 350 million euros. The bonds yielded less than 0.8%.
"For one or two weeks, it is likely that there will be no issuance," said Christian Reusch, co-head of global syndicate at UniCredit. "We have to digest the news -- a lot of people didn't expect this outcome."
