Italcementi Bonds Spur Record Issuance From Peripheral BorrowersHannah Benjamin
Italcementi SpA is selling bonds for the first time since 2010 as companies from Europe’s periphery issue debt at a record pace.
Italy’s biggest cement maker is offering 350 million euros ($467 million) of five-year bonds to yield 6.25 percent, according to a person with knowledge of the sale. The deal is the eighth from an Italian company this year, taking the total to 3.3 billion euros, according to data compiled by Bloomberg.
Peripheral borrowers raised 9.2 billion euros since the start of the year as yields hold near an all-time low of 2.6 percent, according to Bank of America Merrill Lynch’s Euro Periphery Non-Financial Index. Investors are buying the debt even as the euro-area recession deepened more than economists forecast today, with the worst performance in almost four years as Germany, France and Italy suffered slumping output.
“Italcementi needs to refinance some bank lines,” said Nicolo Bocchin, a money manager at Aletti Gestielle SGR SpA in Milan who helps oversee 2 billion euros of assets invested in corporate bonds. “Low yields and relatively low spreads are helping.”
Telecom Italia SpA, Italy’s biggest phone carrier, is marketing a hybrid bond issue, a person with knowledge of the transaction said.
The euro-region’s third-biggest economy shrank 0.9 percent in the quarter through December, deepening the fourth recession since 2001. Italians go to the polls this month as former premier Silvio Berlusconi narrows the lead of front-runner Pier Luigi Bersani.
Iberdrola Tests Market
Iberdrola SA, Spain’s biggest utility, hired banks for a sale of undated and deeply subordinated notes in euros, a person with knowledge of the transaction said. The deal will start after the company meets investors in Europe from tomorrow, the person said.
Vinci SA issued a 300 million-euro floating-rate note at 40 basis points more than the Euribor rate, a person with knowledge of the deal said. Landwirtschaftliche Rentenbank will sell at least 200 million pounds of bonds due December 2017, a person with knowledge of that sale said.
In credit derivatives markets, the Markit iTraxx Europe Index of credit-default swaps linked to 125 investment grade companies rose 0.7 basis point to 112. The Markit iTraxx Crossover Index of contracts linked to 50 companies with mostly speculative-grade ratings climbed 1.5 basis points to 436.
The Markit iTraxx Financial Index of swaps on 25 banks and insurers rose 0.7 basis point to 142.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A basis point on a contract protecting 10 million euros of debt for five years is equivalent to 1,000 euros a year. For Related News and Information: