January euro corp bond issues slump on volatility
By Maya Thatcher
LONDON, Feb 1 (Reuters) - European corporate bond issuance
suffered its slowest January in at least eight years, with
volumes muted by spread volatility, as fears of a possible U.S.
recession continued to spook markets.
The month saw just five non-financial euro corporate bonds
totalling 7.5 billion euros ($11.2 billion), more than 2 billion
euros down on last year, according to data from Societe
Generale, and a far cry from the 20-billion-euros-plus racked up
in 2001, 2002 and 2003.
U.S. conglomerate General Electric (GE.N: Quote, Profile, Research) was January’s most
frequent corporate borrower, with three euro deals.
German cement maker HeidelbergCement (HEIG.DE: Quote, Profile, Research) and French
utility Electricite de France (EDF.PA: Quote, Profile, Research) were also brave enough to
wade into the primary markets, with sales of 1 billion euro and
1.5 billion euro bonds, respectively.
“It’s clear that issuance has dropped off a cliff,” said
Eirik Winter, co-head of fixed income capital markets at
Citigroup.
European credit spreads have been on a roller-coaster ride
since last summer when problems in the U.S. subprime mortgage
market spread to affect banks and companies around the world.
The turbulence that followed peaked on Jan. 22 when the
Markit iTraxx Crossover index %26lt;ITCRS5EA=GFI%26gt; and iTraxx Europe
index %26lt;ITRAC5EA=GFI%26gt; both rose to life highs of 529 and 92.5
basis points respectively, as stock markets plunged around the
world.
Erratic market conditions have put the brakes on some
issuance mid-stride. Greek telecoms group OTE (OTEr.AT: Quote, Profile, Research)
completed meetings with investors in the middle of last week,
but has yet to launch a bond. Bond launches often follow
immediately after completion of meetings and roadshows. Continued…
