City workers in the La Defense business district of Paris on June 18, 2024. Photographer: Nathan Laine/Bloomberg.

The riskiest slice of Europe’s high-yield corporate bond market faces a hazardous road ahead, cautions Goldman Sachs Group Inc.

Europe’s lowest-rated bonds are grappling with a raft of upcoming refinancings—more than 30 percent of the notional outstanding matures between now and the end of 2026—while at the same time the costs to refinance are steep. That, say bank credit strategists including Lotfi Karoui and Spencer Rogers, could lead to more defaults over the next year.

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