The yield on Vestas Wind Systems A/S’ benchmark 2015 note fell the most in three weeks as investors scaled back bets on the risk of a default in the world’s largest wind turbine maker.
The yield on Vestas’ 600 million-euro ($785 million) bond maturing in 2015 fell as much as 87 basis points, or 0.87 percentage point, to 12.46 percent, the biggest decline in three weeks, according to Composite Bloomberg Bond Trader prices. The company’s stock fell as much as 5.6 percent, making it today’s biggest loser in the Copenhagen 20 Index.
Vestas’ bonds have the potential to return investors about 14 percent over one year thanks to an estimated 1 billion euros in unused credit facilities, according Janne Vincent Kjaer, an analyst at Jyske Bank A/S. The shares, which had lost 28 percent this year before today, are unlikely to yield any returns as Vestas fights to keep down costs for developing its new V112 turbine, she said. Kjaer recommends investors reduce their share holdings and buy the bonds.
“We think that as a bond investor you’ll get a good return compared with the credit risk,” Kjaer said in an interview.
The Aarhus-based turbine maker is struggling to make money as competition from Chinese manufacturers intensifies. Vestas’ bonds, which don’t have a credit rating, are trading as though they were graded worse than B-, according to Kjaer.