Eni Sells Euro Bonds as Peripheral Yields Approach Record Low

Eni SpA (ENI) sold bonds in euros after borrowing costs for issuers from Europe’s peripheral nations approached an all-time low.

Italy’s biggest oil company issued 1 billion euros ($1.4 billion) of 15-year notes to yield 120 basis points more than the mid-swap rate, according to data compiled by Bloomberg. The average yield on investment-grade corporate debt from countries including Spain, Italy and Portugal dropped 21 basis points this month to 2.15 percent, one basis point from a record reached May 2013, Bank of America Merrill Lynch index data show.

“There’s been a very strong take-up on Italian deals recently,” said Norval Loftus, chief investment officer at Allegra Investment Management (U.K.) Ltd. in London. “Confidence is returning to the periphery and any surprises are likely to be positive rather than to the downside.”

A poll of Bloomberg subscribers conducted last week showed 57 percent of investors, analysts and traders worldwide believe the worst of Europe’s debt crisis is over. The International Monetary Fund also raised yesterday its forecast for growth in the region to 1 percent this year from 0.9 percent it expected in October.

Filippo Cotalini, a Milan-based spokesman for Eni, referred to a company statement on the bond sale and declined to comment further.

Elsewhere in credit markets, Goldman Sachs Group Inc. (GS) sold 750 million pounds ($1.2 billion) of 12-year bonds to yield 135 basis points more than U.K. government debt. It’s the New York-based bank’s first debt sale in the currency since July 2008, according to data compiled by Bloomberg.

Orange Hybrid

The average extra yield investors demand to hold sterling-denominated corporate bonds instead of government debt fell to 132 basis points, the narrowest spread since October 2007, according to Bank of America Merrill Lynch index data.

Orange SA (ORA), the biggest French phone company, hired banks to set up and arrange a potential sale of hybrid bonds in euros and pounds, another person said. It would be the Paris-based company’s first sale of the securities combining elements of debt and equity, according to data compiled by Bloomberg.

Orange would be the third non-financial borrower to issue hybrid notes in Europe this year, after Enel SpA and Electricite de France SA raised a total 4.5 million euros, Bloomberg data show. Non-financial companies sold a record 30 billion euros of the bonds in 2013.

OAO Russian Railways, Russia’s state-owned rail network, has hired banks to arrange investor meetings in Europe starting Jan. 27, according to a person familiar with the matter. The Moscow-based company issued its first euro-denominated bond in April 2013, according to data compiled by Bloomberg.

Eesti Energia AS, an Estonian utility based in Tallin, is planning to add more debt to its 300 million euros of 4.25 percent notes due October 2018, another person said. The yield on the securities issued March 2012 has since fallen by more than 200 basis points to 2.17 percent, Bloomberg bond prices show.

To contact the reporter on this story: John Glover in London at johnglover@bloomberg.net

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

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