Riskier Borrowers Enter Euro Bond Market as Greek Angst Ebbs

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Europe’s debt markets, reinvigorated by optimism for an end to the Greek crisis, are embracing riskier borrowers.

French glass maker Verallia SA sold 525 million euros ($576 million) of bonds, according to data compiled by Bloomberg. Japanese mobile carrier SoftBank Group Corp. led the revival, selling about $4.5 billion of debt in euros and dollars in the biggest junk-bond sale since April.

Issuance of corporate bonds in Europe increased this week to 28 billion euros, the most since the five days ending June 12, as the Greek government seeks to complete negotiations on a new bailout. Lower-rated companies are joining Europe’s resurgent debt market, which also saw iPhone maker Apple Inc. sell its first notes in pounds on Friday.

“All traffic lights are green and we are seeing transactions move through the pipeline,” said Christian Reusch, co-head of global syndication at UniCredit SpA in Munich.

French medical diagnostics company Labco S.A. and German laboratory operator Synlab Group, both acquired by buyout firm Cinven Ltd. and rated five levels below investment grade by Moody’s, sold more than 1 billion euros of notes on Thursday. Dufry AG, the Swiss operator of duty-free stores, issued 700 million euros of junk bonds the same day, according to data compiled by Bloomberg.

Average Yield

There are signs the market may be struggling to digest a surge in supply, with 56 percent of high-yield bonds sold this year trading below the price at which they were issued, Bloomberg data show.

The average yield on speculative-grade bonds climbed to 4.4 percent Thursday from a six-week low of 4.29 percent on July 20, according to Bank of America Merrill Lynch index data.

Apple, which is rated investment grade, sold 1.25 billion pounds ($1.94 billion) of notes due in 14 years and 27 years, according to Bloomberg data.

The average yield on investment-grade debt in pounds is 3.39 percent, compared with 1.31 percent for those in euros and 3.34 in dollars, the Bank of America Merrill Lynch index data show.

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