America Movil Sells Two-Part Bond in Europe as Yields DeclineVerity Ratcliffe and Katie Linsell
America Movil SAB and Italian transportation company Ferrovie dello Stato SpA sold bonds in Europe after yields on corporate debt in the region fell to the lowest in almost a month.
The wireless carrier controlled by Mexican billionaire Carlos Slim priced the equivalent of 1.1 billion euros ($1.4 billion) of bonds denominated in euros and pounds for the first time in a year, while state-run Ferrovie sold its first notes since 2008, according to data compiled by Bloomberg. Yields on European non-financial company debt dropped to 2.02 percent, the lowest since June 19, Bank of America Merrill Lynch index data show.
Reassurances from central banks including the Federal Reserve and the European Central Bank this month that stimulus measures will remain for longer than expected have helped stabilize European bond markets. Corporate credit risk in the region fell today after China’s economy expanded 7.5 percent in the second quarter, matching analyst forecasts.
“The market today is looking pretty positive because of the Chinese GDP number which came through overnight,” said Harpreet Parhar, a credit strategist at Credit Agricole SA in London. “It wasn’t brilliant but it was in line with consensus and that provided some relief as there were some fears that the number could come in worse than expected.”
America Movil sold 750 million euros of 10-year bonds that were priced to yield 135 basis points more than the mid-swap rate and 300 million pounds ($453 million) of notes maturing July 2033 after initially marketing the deal at 500 million pounds, according to a person familiar with the transaction, who asked not to be identified because the details are private. The sterling bonds were priced to yield 170 basis points more than benchmark gilts.
Ferrovie sold 750 million euros of seven-year securities priced to yield 268 basis points more than swaps, according to data compiled by Bloomberg.
Araceli Ruiz Vazquez, a Mexico City-based spokesman for America Movil, didn’t immediately respond to a telephone call or an e-mail seeking comment outside office hours. Stefano Biserni, a spokesman for Ferrovie in Rome, wasn’t immediately able to comment on the financing.
The cost of insuring European corporate debt against losses fell, with the Markit iTraxx Europe Index of contracts on 125 investment-grade companies declining 3.3 basis points to 105 basis points at 5:20 p.m. in London, the lowest since June 7.
A basis point on a credit-default swap protecting 10 million euros of debt from default for five years is equivalent to 1,000 euros a year. 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.
Elsewhere in credit markets, Louis Dreyfus Commodities BV, the world’s largest raw cotton trader, has mandated banks to arrange a possible bond sale in Europe. The Rotterdam-based trader will begin meeting with investors tomorrow, according to a person familiar with the matter. It would be company’s first sale of bonds in the region, data compiled by Bloomberg show.