France Telecom Sells First Europe Company Samurai Bonds Since Greek Crisis

France Telecom SA raised 52.3 billion yen ($575 million) from the first Samurai bond sale by a European company this year as investor demand began to recover from Greece’s debt crisis.

The Paris-based company sold 46.1 billion yen of 1.23 percent, five-year bonds priced to yield 52 basis points more than the yen swap rate, and 6.2 billion yen of similar-maturity floating-rate notes yielding 67 basis points more than the London interbank offered rate, according to data compiled by Bloomberg.

As a state-backed utility France Telecom’s debt is “easy to buy among overseas names,” said Mana Nakazora, chief credit analyst at BNP Paribas Securities Ltd. in Tokyo. The “credit of France and Germany is much better than that of other European sovereigns.”

Global corporate bond sales climbed to $52.4 billion last week, the most since the period ended April 16, Bloomberg data show. Issuance had faltered amid concern that budget crises in Greece, Portugal, Ireland, Italy and Spain would escalate into a credit freeze similar to the subprime-mortgage meltdown that pushed Lehman Brothers Holdings Inc. to bankruptcy in 2008.

The extra yield investors demand to own Samurai bonds instead of similar-maturity Japanese government debt averaged 1.62 percentage points yesterday, according to an index compiled by Nomura Securities Co. It rose to as much as 1.8 percentage points on June 9 from a low of 1.19 percentage points on April 16, the index shows.

French Borrowers

The French government owns 27 percent of France Telecom, which is the first European company to sell Samurai bonds since GDF Suez on Dec. 8, according to Bloomberg data. The Paris-based operator of Europe’s largest natural-gas network raised 65 billion yen from five-year 1.17 percent bonds priced at a 40 basis-point spread, the data show.

Japanese corporate bond sales dropped 29 percent to 4.36 trillion yen this year compared with the same period of 2009, while Samurai sales fell 20 percent to 481 billion yen this year.

“Investors are struggling with lack of investable bonds, so this sale matched their needs,” Nakazora said.

Samurai bonds are yen-denominated debt sold by overseas borrowers in Japan. A basis point is 0.01 percentage point.

To contact the reporters on this story: Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net Takashi Ueno in Tokyo at tueno@bloomberg.net

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