Corporate bond sales in Europe are heading for the busiest quarter in two years as companies take advantage of record-low borrowing costs.
The equivalent of 261 billion euros ($359 billion) of notes were issued this year, the most since the first quarter of 2012 when 316 billion euros of debt was raised, according to data compiled by Bloomberg. The average yield on speculative-grade corporate bonds in euros fell to a record 4.42 percent today, according to Bank of America Merrill Lynch index data.
European Central Bank President Mario Draghi said this month that benchmark borrowing costs will remain at historic lows well into an economic recovery. U.K. miner Anglo American Plc, the financing unit of Bayerische Motoren Werke AG, the world’s biggest manufacturer of luxury vehicles, and Duerr AG, the maker of robots that paint cars, are among companies selling bonds today.
“It’s a very low-yield environment, investors have lots of cash to invest and they’re constantly on the lookout for the primary market because that’s the best way to add credit risk,” said Juan Esteban Valencia, a strategist at Societe Generale SA in Paris. “Corporates are taking advantage of very low all-in costs, they’re happy to come to market and investors are happy to pick up the highest yields they can get.”