AstraZeneca Leads 5.5 Billion-Euro Bond Binge After Holidays

  • Deutsche Bank forecasts `busy week' for corporate sales
  • Borrowing costs pushed to year low amid expanded ECB stimulus

AstraZeneca Plc led a 5.5 billion-euro ($6.3 billion) flurry of bond offerings, kicking off a week that Deutsche Bank AG said would unleash a wave of pent-up sales.

“We’re expecting an unusually busy week,” said Helene Jolly, a director in debt syndicate at Deutsche Bank in London. “These are extremely attractive funding conditions.”

Airbus Group SE and Royal Dutch Shell Plc also issued bonds in the single currency, data compiled by Bloomberg show. U.S. commodity company Bunge Ltd. and Spanish insurer Mapfre SA also hired banks for potential sales, according to people familiar with the matter who asked not to be identified because they’re not authorized to speak publicly.

Borrowing costs for investment-grade companies have fallen to the lowest in a year as the European Central Bank prepares to start purchasing corporate debt next month under its expanded stimulus program. Highly rated firms have sold about 70 billion euros of securities since the ECB outlined the plan on March 10, surpassing the 49 billion euros of bonds sold this year up to that point, according to data compiled by Bloomberg.

“Everything has tightened in anticipation of the ECB’s corporate bond buying,” said Jolly. Some companies held back offering plans over the past few weeks because of earnings blackouts and national holidays in Europe, she said.

Market ‘Nirvana’

Investors demand an average yield of about 1 percent to hold euro-denominated bonds of investment-grade companies, Bank of America Merrill Lynch index data show. The yield dipped below that level for the first time in February last year, just before the ECB’s quantitative-easing program began.

Sinking borrowing costs should help create a “nirvana” for borrowers, Suki Mann, founder of bond-market commentator, wrote in a note. “They are already fantastic on a historical relative basis and we believe will stay that way through the whole of this year, at minimum,” Mann said.

AstraZeneca sold 2.2 billion euros of securities in a three-part deal, while Shell sold 1.75 billion euros of bonds due in eight and 12 years, according to data compiled by Bloomberg. Officials at AstraZeneca couldn’t immediately comment on the sale when contacted and Shell declined to comment.

Airbus’s 1.5 billion-euro sale included 900 million euros of 15-year bonds at a yield of about 60 basis over benchmark rates, less than initially offered, according to a person familiar with the matter. It also sold a 10-year note, according to data compiled by Bloomberg. A company official declined to comment on the sale.

Swiss Chocolate

Investors demand a yield premium of 116 basis points above benchmark rates to hold euro-denominated investment-grade notes maturing in a decade or more, Bank of America Merrill Lynch index data shows.

Swiss chocolate maker Barry Callebaut AG is hiring banks to sell at least 350 million euros of junk bonds, another person familiar with the plan said.

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