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Air Products Markets First Euro Bond Since 2007 as Costs Drop

Air Products & Chemicals Inc. (APD), the world’s largest hydrogen and helium supplier, is marketing its first bonds denominated in euros since 2007 as the average yield on investment-grade corporate notes in the region falls.

The industrial-gas producer, based in Allentown, Pennsylvania, is selling 300 million euros ($398 million) of seven-year bonds, according to a person familiar with the matter who asked not to be identified because it’s private. The average yield for investment-grade bonds in euros fell to 1.96 percent, the lowest in more than a week, and down seven basis points since the start of the month, Bloomberg bond index data show.

Credit markets rallied worldwide in July after Federal Reserve Chairman Ben S. Bernanke said there’s no fixed schedule for slowing stimulus measures. The cost of insuring corporate debt in Europe is poised for its first monthly decline since April as sales of investment-grade bonds in euros rose 17 percent from June, the quietest month since December, according to Bloomberg data.

“We had so much market volatility in June in particular, with the discussions about Fed tapering, which meant that the market was almost closed,” said Jonathan Pitkanen, the London-based head of credit research at Threadneedle Asset Management Ltd. “There were a lot of deals waiting in the sidelines for the market to reopen in June and we’ve seen the result of that this month.”

U.S. Companies

Air Products is the first non-financial U.S. company selling bonds in Europe since General Electric Co., the world’s biggest maker of jet engines, raised 1 billion euros with notes due July 2020 on July 12 through its GE Capital European Funding unit, data compiled by Bloomberg show. U.S. companies raised 4.8 billion euros from bond sales denominated in euros and pounds in July, the busiest month since April and up from 900 million euros in June.

Air Products is offering its notes to yield 50 basis points more than the benchmark mid-swap rate, the person said. Albert Raich, a spokesman for Air Products in Barcelona, Spain, didn’t immediately respond to a phone call seeking comment on the sale.

The average spread over swaps on investment-grade euro bonds narrowed to 89.8 basis points, the least since June 19, Bloomberg bond index data show.

Poison Pill

Billionaire William Ackman’s Pershing Square Capital Management LP has bought a 9.8 percent stake in Air Products less than a week after the company adopted a measure to prevent its acquisition. Ackman confirmed the purchase, valued at about $2.2 billion, in an e-mail today. Under the poison-pill shareholder rights plan, which was approved on July 25, existing investors are given the right to acquire deeply discounted shares should an investor acquire 10 percent of the company without board approval.

The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies has fallen 19 basis points this month to 100, almost erasing the 21-basis-point increase over the previous two months.

The Markit iTraxx Crossover Index of default swaps on 50 companies with mostly high-yield credit ratings dropped 73 basis points this month to 404. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers fell 27 basis points to 141 and the subordinated index decreased 33 basis points to 218.

A basis point on a credit-default swap protecting 10 million euros of debt from default for five years is equivalent to 1,000 euros a year. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

To contact the reporters on this story: Verity Ratcliffe in London at; Katie Linsell in Madrid at

To contact the editor responsible for this story: Shelley Smith at

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