European Market Continues To Roll

Europe is catching a high yield fever - and American deal makers are eager to cash in as the market evolves.

"Looking forward, it's Europe. That's where the market is," said one high profile attorney in the high yield market. "It's 1980 in Europe today, and we've got 20 years of crazy growth over there and consolidations and acquisitions. And they're just beginning to sample junk bonds."

Most of the major investment banks are already beginning to finance multi-tranche deals. In recent months, some deals have included both dollar and Euro-denominated note. The banks are expanding their European offices and transferring many of their New York-based bankers overseas.

"We're moving people to London, we're hiring people in London and we're not alone. It's going crazy over there. It's where Silicon Valley was 10 years ago. It's just beginning to take off," the attorney said.

On the domestic front, junk bonds were pivotal in building the telecom industry over the last ten years, with junk names like Sprint, MCI and Worldcom now dominating the wireless PCS sector. Junk is a relatively cheap financing option for companies that need fast capital. It provides financing for the little guys, and some of them will become the next Microsofts and the next AT&Ts, said one market player.

One caveat is that fact that the European market is far less developed than the American market in terms of regulatory issues and the number of buy-side players. Still, the marketplace should not take 20 years to develop and mature, the way it did domestically, other predicted.

"With technology, it will speed up the process very quickly - the ability to do trades online and do exchanges online will help the education process and take away the fear factor because you're going to have knowledge," one market observer said.