MAN SE, Europe’s third-biggest commercial vehicle maker, raised 750 million euros ($984 million) from its first bond sale since 2009 as car and truck company note yields fall to the lowest in at least 16 years.
The five-year securities were priced to yield 68 basis points more than benchmark swap rate, or about 2.2 percent, according to data compiled by Bloomberg. That compares with a 65 basis-point spread on Munich-based MAN’s 7.25 percent securities due 2016, Bloomberg Bond Trader prices show.
European car and truck maker bond yields plunged 0.83 basis points this year to 2 percent, the lowest since Bank of America Merrill Lynch’s Euro Automotive index started in 1996. Corporate bond yields are falling across the board as the European Central Bank’s program of providing cheap loans to banks bolsters investor confidence in the region’s credit markets.
“Obviously lower yields are an attraction, but it’s a receptive market and has been since January,” said Suki Mann, a credit strategist at Societe Generale SA in London. The ECB’s longer-term refinancing operation has been the driver for the rally, he said.
MAN is taking advantage of “favorable” market conditions to sell the bonds, which will be used for general corporate purposes, said spokesman Stefan Straub in Munich. Banca IMI SpA, BayernLB, Commerzbank AG and Banco Santander SA managed the sale of the new bonds, he said.
The truckmaker, controlled by Volkswagen AG, has a further 1.5 billion euros of bonds outstanding, including 1 billion euros maturing in 2013, according to data compiled by Bloomberg. MAN is ranked at A3 by Moody’s Investors Service and an equivalent A- at Standard & Poor’s.
MAN’s sales and earnings will fall this year amid a stagnant commercial-vehicle market in Europe, it forecast on Feb. 14. Net debt rose to 2.2 billion euros last year from 1.8 billion euros in 2010, the company said.