Europe’s largest publicly traded property owner joined French water and waste company Suez Environnement Co. (SEV) and Deutsche Annington Immobilien SE (ANN), Germany’s biggest residential landlord, in marketing euro-denominated securities. The Markit iTraxx Europe Index of credit-default swaps on 125 companies with investment-grade ratings fell 2.6 basis points to 101 basis points at 3:23 p.m. in London.
Investors are weighing the impact of the first partial U.S. government shutdown in 17 years after lawmakers passed a midnight deadline without reaching a compromise over federal funding. With 800,000 employees temporarily out of work, there is speculation the Federal Reserve will further delay a plan to slow bond purchases to offset any damage to the economy.
“The U.S. shutdown probably pushes back still further the likelihood of tapering quantitative easing to at least the December meeting,” said Craig Veysey, the London-based head of fixed income at Sanlam Private Investments Ltd., which manages more than $10 billion. “The Fed cited the current fiscal risks as one of their key reasons for caution around tapering QE at the latest meeting.”
The average yield on high-grade corporate bonds was little changed at 1.93 percent, near the lowest since Aug. 12, Bloomberg bond index data show.
Borrowing costs for companies from Europe’s peripheral nations jumped amid concerns Italy’s government may collapse, forcing Prime Minister Enrico Letta to call an early election that could slow economic reforms. Yields on financial corporate debt climbed 21 basis points to 3.2 percent, the biggest one-day rise since July 2012, according to Bank of America Merrill Lynch index data.
In the new issue market today, Paris-based Unibail sold 500 million euros ($678 million) of five-year notes yielding 68 basis points more than the mid-swap rate, according to data compiled by Bloomberg. Camille Delomez, a spokeswoman for Unibail, didn’t respond to an e-mail seeking comment.
Suez Environnement, also based in Paris, raised 500 million euros from 10-year bonds yielding 77 basis points more than swaps.
Bochum, Germany-based Deutsche Annington issued 500 million euros of notes due October 2021 at a spread of 183 basis points. Proceeds from the sale through Deutsche Annington Finance BV will be used to refinance debt and for general corporate purposes, according to a person familiar with the matter.
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