Gecina Sells 500 Million Euros of Bonds in First Benchmark Deal Since '04

Gecina SA, France’s second-largest publicly traded real estate company, raised 500 million euros ($637 million) from its first benchmark bond issue in six years.

The four-year notes yield 285 basis points more than the swap rate, according to data compiled by Bloomberg. Gecina, which last sold euro-denominated bonds in June 2004, has an investment-grade ranking of Baa3 by Moody’s Investors Service, and a junk rating of BB+ from Standard & Poor’s.

Gecina joined European companies this week pushing bond issuance to the most in two months to take advantage of falling borrowing costs. The yield spread on investment-grade debt is now 139 basis points over swaps, a 22 basis-point drop from this year’s peak of 161 on July 12, Bank of America Merrill Lynch index data show. A basis point is 0.01 percentage point.

“The spread on Gecina is wider than on other new issues this week, so it’s bringing in investors who are looking for yield,” said Charles Stephens, a debt capital markets specialist at Matrix Corporate Capital LLP in London. “There’s been a lot of demand for spread product and this has been the big theme this week.”

Banque PSA, the finance unit of carmaker Peugeot SA, raised 500 million euros from four-year investment-grade bonds at a yield spread of 193 basis points, Bloomberg data show. Banque PSA is rated Baa1 by Moody’s and one step lower at BBB by S&P.

Gecina wasn’t immediately available for comment.

To contact the reporter on this story: Sonja Cheung in London at scheung58@bloomberg.net; Kate Haywood in London at khaywood@bloomberg.net

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