Euro High-Grade Corporate Bond Issuance Down 25% In 2011-Dealogic
24 November 2011 - 3:54AM
Dow Jones News
Euro-denominated investment-grade corporate issuance is down 25%
on 2010 to the lowest level since 2005, data provider Dealogic said
in a report Wednesday.
Volumes for the year to Nov. 22, stand at EUR98.6 billion.
Following zero issuance in August, third-quarter volumes totaled a
low EUR16.7 billion, well down on the EUR26.3 billion issued in the
third quarter of last year, Dealogic said.
The high volatility in credit markets and the lack of any
resolution to the euro-zone debt crisis has left investors
directionless, although sporadic windows of opportunity allowed
some corporate issuers to come to market.
Elsewhere, U.S. issuers in euro-denominated debt recorded the
largest year-on-year volume decrease with issuance down 51% to
EUR3.1 billion in the year to Nov. 22 from EUR6.3 billion in the
same period in 2010, Dealogic said.
For a second year running, French corporates issued the largest
proportion of euro-denominated bonds, despite volumes dropping 31%
on the year to EUR30.3 billion in 2011, it said.
However, market volatility is only one factor affecting the
decline of French corporate issuance, with the rising cost of debt
also holding some borrowers at bay.
Comparing July and November new issue premiums paid by some
French corporates, as witnessed in the Tuesda's deal by French
media group Vivendi SA (VIV.FR) deal Tuesday, provides some insight
into declining volumes.
Vivendi was in the market with a EUR500 million four-year deal
that priced at 215 basis points over midswaps with a new issue
premium of 50 basis points. The EUR500 million seven-year deal
priced at 265 basis points over midswaps and at the wider end of
initial guidance, with a new issue premium of 55 basis points.
Back in July, Vivendi issued a four-year bond at 95 basis points
over midswaps paying a premium of 10 basis points and a 10-year
bond at 145 basis points over midswaps, paying a premium of seven
basis points.
"The deals were a massive struggle...highlighting that even with
'attractive' premiums the market is fatigued by the number of
French borrowers in the market," said Suki Mann, credit strategist
at Societe Generale in a recent note.
The French corporate sector as a whole has been noticeably
active this year and some market participants think it is because
they have reduced access to funding from banks and need additional
liquidity.
-By Sarka Halas, Dow Jones Newswires; +44 (0) 207 842 9236;
Sarka.Halasova@dowjones.com
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