China National Offshore Oil Corp. is marketing its first bonds in euros as the average yield investors demand to hold investment-grade securities in the currency holds at the lowest in more than six weeks.
China’s largest offshore oil and gas producer is selling seven-year benchmark-sized notes to yield about 140 basis points more than the mid-swap rate, according to a person familiar with the matter. The average yield on high-grade debt is 1.9 percent, with the premium over swaps 81 basis points, Bloomberg bond index data show.
Cnooc is adding to 164 billion euros ($221 billion) of corporate bond sales in Europe this quarter, 20 percent less than the same period last year. High-grade yields fell 12 basis points this month as the Federal Reserve refrained from reducing its monthly asset purchases and the European Central Bank considers further stimulus measures.
“Funds will find this deal attractive for the pickup of extra yield and diversification,” said Christian Wildmann, a fixed-income portfolio manager in Frankfurt at Union Investment Privatfonds GmbH, part of Germany’s Union Investment Group that oversees about 201 billion euros of assets. “Crossover investors who look at emerging market debt in euros have been quite cautious due to tapering as well as the improving European outlook causing rising yields.”
Cnooc is also selling 10-year securities in dollars yielding about 210 basis points more than Treasuries, according to a person familiar with the matter. The Beijing-based company is offering the euro and dollar securities through its Cnooc Curtis Funding No. 1 Pty Ltd. unit.
Also in the European credit market today, Italian utility Hera SpA (HER) is selling 500 million euros of eight-year bonds yielding about 150 basis points to 155 basis points more than swaps, according to a person familiar with the deal. The Bologna-based company last issued benchmark-sized notes in January, Bloomberg data show.
Rentokil Initial Plc (RTO), the U.K. services company offering pest control and hygiene services, is holding a conference call with investors at 2 p.m. in London for a possible sale of bonds in euros. Rentokil last sold notes a year ago when it priced 500 million euros of seven-year securities to yield 195 basis points more than swaps, according to Bloomberg data.
In the high-yield market, Medical Properties Trust Inc. (MPW), a U.S. healthcare real estate investment trust, is raising 200 million euros of seven-year notes to yield about 5.75 percent. The sale through the company’s MPT Operating Partnership LP and MPT Finance Corp. unit is the first in euros for the Birmingham, Alabama-based company.
The average yield on high-yield debt is 4.79 percent, near the lowest since Aug. 20, Bloomberg bond index data show.
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