The yield on Vestas Wind System A/S’s 2015 bond fell the most in eight trading days in Copenhagen as the risk of default at Europe’s biggest turbine maker fades.
Vestas’ 4.625 percent 600 million-euro ($769 million) bond maturing in 2015 yielded 6.08 percent at 9:25 a.m. in the Danish capital, according to the Composite Bloomberg Bond Trader prices. That’s down from 6.25 percent yesterday and off a peak of 26.1 percent in May 21, 2012.
Vestas’s Bloomberg default risk rating, a measure based on the company’s reported earnings, operating performance and market information, fell to 0.00198 percent yesterday. That’s the lowest since Oct. 28, 2011, and compares with a peak of 2.54423 percent on Nov. 21. Investors have now priced out the risk of a credit event and are starting to price in the prospect of a return to profit, according to Sparinvest A/S, which is one of the Aarhus, Denmark-based producer’s biggest bond owners.
“When we bought, it was on the basis that a default was in the price,” Klaus Blaabjerg, senior bond portfolio manager at Sparinvest said in an interview. “We didn’t believe in a default. We saw that the business was not without options to save itself.”
Vestas’s shares, which have more than tripled in value this year, gained as much as 3.7 percent in Copenhagen today to the highest price since Aug. 1, 2011.