Europe’s Junkiest Junk Off Limits Amid Brutal Restructurings (1)

Debt investors have been so badly bruised by a recent string of fractious restructurings in Europe that they’ve started actively avoiding the continent’s riskiest credits.

In a year that’s been defined by almost insatiable demand for corporate bonds, European debt rated triple C — one of the lowest ratings categories that usually offers big rewards to compensate for investment risk — has returned next to nothing. That compares with more than 4% for other ratings groups, Bloomberg index data shows.

It’s even worse in the loans world, where total returns for triple-C borrowers are down 1.8%, compared to 4% ...