The unit of the world’s largest broker of transactions between banks is offering five-year securities priced at about 240 basis points more than the benchmark midswap rate, according to a person familiar with the matter. The average yield on euro-denominated investment-grade bonds is 1.68 percent, down from 1.95 percent at the start of the year, Bloomberg Index (BERC) data show.
Investors placed $4.6 billion into European investment-grade credit funds this year and $4.1 billion into high yield, according to Bank of America Corp., as economic confidence in the euro-area grows. Companies raised 56 billion euros from bond sales this month, down from 108 billion euros in January, according to data compiled by Bloomberg.
“There’s simply no stopping credit,” said Juan Esteban Valencia, a Paris-based strategist at Societe Generale SA. “There’s cash to put to work and simply not enough new bonds hitting the screens to meet demand.”
The average yields investors demand to hold investment-grade bonds over the mid-swap rate dropped four basis points this month to 75 basis points, the tightest spread in three months, Bloomberg data show.
Also in the new-issue market, OAO Russian Railways is selling its first euro-denominated notes since April 2013, marketing nine-year bonds to yield about 300 basis points more than swaps.
Gas Natural SDG SA (GAS), Spain’s largest gas supplier, is selling 500 million euros of 10-year notes. The Barcelona-based utility is issuing the securities through its Gas Natural Fenosa Finance BV unit.