Corporate Bond Sales on Rise
Corporate Bond Sales Surge Prompts SocGen to Lift Issue Forecast
Europe’s busiest day for corporate bond sales in two years prompted Societe Generale SA (GLE) credit analysts to increase their 2012 issuance forecast by about 40 percent to “closer to” 100 billion euros ($132 billion).
Bond offerings reached 47.5 billion euros this year, according to Paris-based SocGen, after Fiat SpA, Daimler AG and Electricite de France SA led 6.6 billion euros of sales yesterday in the biggest day of issuance since Jan. 12, 2010. SocGen will publish the revision to its current forecast of 70 billion euros next week, according to Suki Mann in London.
Greece’s debt restructuring and the European Central Bank’s injection of cash into banks through loans have combined to boost optimism that Europe’s sovereign crisis will be contained. This has driven yields on investment-grade corporate debt down to 2.73 percent, just above last week’s record low 2.6 percent, Bank of America Merrill Lynch index data show.
“Rates are still near all-time lows and companies are thinking it doesn’t get cheaper than this and prudently looking to refinance what would likely have been more expensive if they’d waited,” said Tim Barker, head of credit research at Societe Generale in London. “The market’s open, investors have got cash and companies need to ensure their future, which adds up to a heady flood of issuance.”
The flood of issuance continued today with BAA Funding Ltd., owner of London’s Heathrow airport, Neste Oil Oyj and RCI Banque SA, Renault SA’s financing unit, selling bonds.