Intesa Sanpaolo SpA (ISP), Italy’s second-largest bank, is helping fuel a surge of bond sales from southern European lenders after borrowing costs for financial companies in the region’s periphery fell to a record.
Banca Popolare di Vicenza SCPA, Banco Popular Espanol SA and Portugal’s Banco Espirito Santo SA also marketed notes in euros, people familiar with the deals said. The average yield on financial corporate bonds from countries including Italy, Spain and Portugal dropped to 2.61 percent, according to Bank of America Merrill Lynch’s Euro Periphery Financial index.
Borrowing costs for banks in Europe’s most indebted nations are falling after gains in euro-area manufacturing and retail sales spur a government bond rally. That allowed Italy to auction three-year notes at a record-low yield of 1.51 percent today while Portugal’s Secretary of State for Treasury, Isabel Castelo Branco, said the bailed-out nation may be able to sell bonds before its rescue program ends in May.
“Now that the sovereigns have tightened, bank spreads are tighter on the back of that,” said Carlo Mareels, a credit analyst at RBC Capital Markets in London. “There’s a window of opportunity that’s opened, so the banks are coming as quickly as possible.”
Intesa sold 750 million euros ($1 billion) of eight-year bonds that were priced to yield 175 basis points more than the mid-swap rate, according to data compiled by Bloomberg. Banca Popolare di Vicenza is marketing 500 million euros of securities maturing January 2017 at a spread of 300 basis points. The Vicenza, Italy-based lender’s three-year bonds issued in February 2012 pay a coupon of 7.5 percent, according to data compiled by Bloomberg.
Banco Espirito Santo, based in Lisbon, is selling 750 million euros of five-year notes that will be priced to yield 285 basis points more than swaps and Banco Popular Espanol (POP) issued 500 million euros of securities through its BPE Financiaciones SA unit. The Madrid-based lender offered three-year notes at a spread of 190 basis points, data compiled by Bloomberg show.
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