Hutchison Whampoa Ltd. led corporate bond sales in Europe this week as borrowing costs fell to a record and the cost of insuring company debt reached a three-year low.
Issuance in euros and pounds totaled 8.9 billion euros ($11.6 billion), down from 13.9 billion euros the previous week and 45 percent below the weekly average this year, according to data compiled by Bloomberg. The Hong Kong-based company controlled by billionaire Li Ka-Shing raised 1.75 billion euros from perpetual hybrid bonds on May 7 in its first sale in the currency in a year.
Companies are fundraising in Europe as yields on investment-grade corporate debt fell to a record 1.73 percent, while yields on junk-rated notes reached an all-time low of 5.02 percent, Bank of America Merrill Lynch index data show. The Markit iTraxx Europe Index of credit-default swaps on 125 companies with investment-grade ratings was little changed at 93 basis points after falling to 90 basis points on May 7, the lowest since May 2010.
“On one side, the hunt for yield has gained strength in recent months which is supporting bond issuance, especially of hybrid bonds,” said Andrea Cicione, a strategist at Lombard Street Research Ltd. in London. “On the other side, there’s an opportunistic situation for issuers to lock in very favorable rates. Poor growth in Europe will keep yields low.”