Outotec Bond Sale Extending Record for Debut Issuers in Europe

Outotec Oyj (OTE1V), the Finnish supplier of smelters to mining companies, is selling its first bonds, extending this year’s record for companies making their debuts in Europe.

Outotec is poised to become the 74th first-time issuer, adding to the equivalent of $39 billion of bonds in euros and pounds this year and outstripping the previous high of $32 billion in 2012, according to data compiled by Bloomberg. EDP-Energias de Portugal SA, the nation’s biggest utility, Eni SpA (ENI), Italy’s largest oil company and Polish broadcaster TVN SA, are also selling securities, according to people with knowledge of the sales.

Corporate treasurers are being drawn to the bond market as banks shrink their loan books to meet new rules to protect taxpayers after the financial crisis compelled governments to bail out lenders. Loans to companies in the region fell 8 percent in the first half and are 36 percent lower than the $598 billion recorded in the same period of 2011, according to data compiled by Bloomberg.

“Companies are finding the new issue markets are open for pretty much anyone at rates that are still quite low, while banks are reducing their balance sheets,” said Juan Esteban Valencia, a Paris-based credit strategist at Societe Generale SA. “I expect issuance will be strong throughout September.”

Growth Strategy

Espoo, Finland-based Outotec, which is unrated, is raising 150 million euros from seven-year bonds that will yield 200 basis points more than swaps. “The bond will support our long-term growth strategy where mergers and acquisitions are an integral part,” Mikko Puolakka, the company’s chief financial officer, said in a telephone interview. “We wanted to diversify our funding sources and think that this is a good time to be in the bond market as interest rates are low.”

Lisbon-based EDP, rated one level below investment grade at BB+ by Standard & Poor’s, is selling seven-year benchmark-sized notes in euros that may yield 5 percent to 5.125 percent. The company last sold bonds in euros in September 2012, Bloomberg data show.

Eni is marketing 900 million euros ($1.2 billion) of 12-year notes to yield 130 basis points more than the mid-swap rate while Acea SpA (ACE), Rome’s local power company that last sold securities in March 2010, is raising 600 million euros from five-year bonds to yield 230 basis points more than swaps.

Average yields on investment-grade bonds rose six basis points this week to a two-month high of 2.1 percent, up from a record-low 1.4 percent in May, Bloomberg index data show. The rate on high-yield notes is 4.95 percent, up from 4.2 percent four months ago, according to the data.

TVN, Poland’s second-largest television network, is raising 430 million euros from seven-year bonds that the company can redeem after three years through its TVN Finance Corporation III AB unit. The Warsaw-based broadcaster will use the proceeds to refinance notes maturing in 2017, according to a person familiar with the sale.

-- Editors: Michael Shanahan, Shelley Smith

To contact the reporters on this story: Natasha Doff in London at ndoff@bloomberg.net; Katie Linsell in Madrid at klinsell@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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