High-Yield Companies Debut Bonds in Europe as Credit Risk Falls
Maisons du Monde SAS, the French home furnishings retailer, and Italian gambling company Gamenet SpA are selling their first bonds as the cost of insuring European debt against losses fell for a fourth day.
Maisons du Monde priced 325 million euros ($429 million) of 9 percent notes due August 2020 while Rome-based Gamenet is meeting investors for a potential sale of 200 million euros of securities. The Markit iTraxx Crossover index of credit-default swaps on 50 companies with high-yield credit ratings fell 3 basis points to 396 basis points at 3:12 p.m. in London, the lowest since May 28.
Bill Gross, who manages the world’s biggest bond fund at Pacific Investment Management Co., said he expects the Federal Reserve to maintain stimulus measures until at least 2016. Fed Chairman Ben S. Bernanke told Congress last week it was “way too early to make any judgment” on whether the central bank will begin cutting back quantitative easing in September.
“Credit markets are now quite positive and so it’s now a good time to issue,” said Andrea Cicione, a strategist at Lombard Street Research Ltd. in London. “A few high-yield companies have been waiting to issue. They have been holding on for a while for markets to be in a better shape.”
A spokeswoman for Maisons du Monde was not immediately available to comment on the bond sale.
The average yield investors demand to hold junk-rated bonds from non-financial companies fell to 5.74 percent, the lowest since June 6, according to Bank of America Merrill Lynch’s Euro High-Yield Constrained index.
Maisons du Monde, based in Nantes, sold the bonds through its parent company Magnolia SA to finance its acquisition by Bain Capital Partners LLC and its managers. The notes were assigned a provisional B rating by Standard & Poor’s and an equivalent B2 by Moody’s Investors Service, five levels below investment grade.
Gamenet is meeting investors today in London and in Amsterdam on July 25. Proceeds from the bond sale will be used to repay existing debt and for general corporate purposes, according to a statement on the company’s website. The deal is being coordinated by UBS AG and Credit Suisse Group AG, along with UniCredit SpA and Banca IMI SpA, according to a person familiar with the deal.
Manutencoop Facility Management SpA, an Italian property manager, plans to meet investors this week for a high-yield bond sale in two parts, according to a person familiar with the deal. The Bologna-based company is seeking to issue a total 450 million euros of seven-year, fixed-rate notes and six-year, floating-rate notes to repay existing debt and fund working capital. The securities may be rated B2 by Moody’s.
Also in the market today, Tag Immobilien AG (TEG), Germany’s third-largest publicly traded residential landlord, has mandated banks for a possible sale of euro-denominated bonds, a person with knowledge of the matter said. The Hamburg-based company will begin meeting investors tomorrow, said the person, who asked not to be identified because the details are private.
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