Picture the scene. Twelve high yield bonds being marketed in a week, yields pushing tighter, structures getting more aggressive, credits getting weaker. Triple-C rated bonds from gaming companies, bathroom furnishings makers and car part makers.
And thats not all. Payment-in-kind? No problem. Nothing seems to be able to stop the runaway train. Perhaps the European high yield market has become mature after all.
But then, crash! Along comes a sovereign crisis and the market crumbles again.
That was in April 2011. But it could have described the scene two years later, in May 2013 with one important difference. This time around, there seems to be little on the horizon that could stop the rush.
New records are being set, with 18 deals marketed last week. So far there has been 40bn of issuance from Europe this year, making last years record of 60bn appear ripe for the taking.
Out of last weeks deluge, all but four deals were sold. The overwhelming majority of issuers were debutants, lured in to their dfirst steps in public markets by the leanest pricing imaginable.
And as it was in 2011, so it is now. PIK bonds are being used to finance acquisitions, with R&R Ice Cream now emulating Dometic two years ago. The willingness to support weaker credits seems inexhaustible. Eircom and Klöckner, two of the current crop of issuers, defaulted only last year.
Even the sovereign crisis is barely troubling the buyside. Investors, their pockets bulging with cash, seem hardly bothered about the periphery, piling in to debut deals from Greece (Hellenic Petroleum) and Spain (Gestamp Automoción) last week. Secondary levels suggest decent longer term support, too. Spreads are creeping tighter.
If it all seems too good to be true, its worth remembering that two years ago, it was. All was rosy in April 2011 until the sovereign crisis blew up, turning record high yield fund net inflows into outflows in a trice.
Memories of this should focus the minds of bankers and the issuers they advise. Even if there appears to be less buyside fear of an external shock of the nature of the sovereign debt crisis, senior bankers are privately expressing fears that a renewed investor focus on fundamentals could quickly scupper this.
Investors have quickly driven a remarkable trend of high risk without the yield to match. But when reality crashes in, that sentiment could change just as fast.