Bond sales in Europe are defying the quiet August period as companies take advantage of optimism that governments and the European Central Bank are making progress in tackling the debt crisis.
Societe Generale SA, France’s second-largest bank, sold 1 billion euros ($1.2 billion) of bonds due 2018, while Spain’s Banco Santander SA sold 2 billion euros of two-year notes, according to data compiled by Bloomberg. A.P. Moeller-Maersk A/S, owner of the largest container carrier, offered its first bonds in euros since November 2010.
Today’s issuance lifts this month’s sales of bonds in euros and pounds to 18.3 billion euros, 11 percent higher than the same period of 2011, according to data on corporate, financial and agency bond sales compiled by Bloomberg. Offerings have jumped as the ECB considers steps to cut borrowing costs for the euro area’s peripheral nations and on speculation leaders will make progress on Greece’s debt woes at meetings this week.
“The overall sentiment seems to be cautiously optimistic, and with the recent headlines from the ECB and given that we shall soon be approaching the fourth quarter, the hunt for yield is on,” said Steven Mitra, a partner LNG Capital LLP in London.
SocGen’s notes were priced to yield 1.25 percentage points more than the benchmark swap rate. That compares with a spread of 2.09 percentage points for Bank of America Merrill Lynch’s EMU Financial Corporate Index.
“We already completed our long-term funding plan for the year but we still want to be opportunistic and be able to take advantage of good funding conditions,” said Vincent Robillard, head of group funding at SocGen. “For the last two or three weeks we’ve seen a lot of liquidity in the market and today’s conditions were good enough to take advantage.”
Santander’s fundraising was the first sale of senior unsecured bonds by a Spanish bank in more than five months. The notes for the Santander, Spain-based lender were priced at a spread of 3.9 percentage points more than the swap rate.
Bank Nederlandse Gemeenten, the Dutch municipal lending agency, sold 1 billion euros of bonds due 2022 at a spread of 40 basis points, or 0.4 percentage point.
Maersk in Copenhagen raised 750 million euros from seven-year bonds at a spread of 2 percentage points, data compiled by Bloomberg show. The company isn’t rated by Moody’s Investors Service, Standard & Poor’s or Fitch Ratings.
“We thought the opportunity to sell was good,” said Jan Kjaervik, head of group finance at Maersk. “This week hasn’t reflected the usual type of summer season with less liquidity. This is led by sentiment in the market so it’s important for us to act swiftly when the opportunities are there.”