Europe's corporate credit market has been in the sweet spot for 18 months—and isn't ready to be dislodged. Strong demand, resilient credit quality and low yields on other asset classes should continue to support the market.

Investment-grade European corporate bonds have returned 6.9% this year. High-yield has turned in 10.9%, Bank of America Merrill Lynch says. There may be more: While yields have fallen sharply, the premiums over government bonds remain attractive, at 1.79 percentage points for high-grade and 6.78 percentage points for "junk" debt. Earnings have been strong, and the default rate is expected to fall.