Unilever Euro Bonds Rise on First Trading Day as Spreads NarrowVerity Ratcliffe
Unilever’s 750 million euros ($995 million) of notes rose on their first day of trading as yield premiums on investment-grade corporate bonds in the region dropped to a five-week low.
The Anglo-Dutch company’s 1.75 percent notes due August 2020 rose 0.5 cent on the euro to 100.2 cents at 3:01 p.m. in London, according to data compiled by Bloomberg. The extra yield investors demand to hold euro-denominated investment-grade bonds rather than government securities fell to 108.8 basis points, the lowest since June 19, Bloomberg bond indexes show.
Borrowing costs dropped in Europe this month after central banks in Europe and the U.K. sought to calm a rout in bond markets triggered when Federal Reserve Chairman Ben S. Bernanke indicated stimulus measures might be reduced. The ECB and the U.S. Federal Open Market Committee are both holding meetings this week.
“I think that Europe is sitting in a reasonably good place,” said Andrew Sheets, head of European credit strategy at Morgan Stanley in London. “If the FOMC is more dovish, broad risk markets will take that well. If the Fed is more hawkish, it might remind investors of the contrast with recent statements out of the BoE and the ECB.”
The average yield for euro-denominated investment-grade company notes onds fell to 1.97 percent, the lowest in a week, according to data compiled by Bloomberg. Unilever is the first non-financial company to sell investment-grade bonds in euros in a week, according to Bloomberg data. The consumer-goods maker’s first sale since 2008 received four times as many offers than bonds available, a person familar with the matter said, asking not to be identified because the details are private.
French investors bought 27 percent of the bonds, while buyers in the U.K. took 25 percent, 22 percent went to investors in Germany and the remaining 26 percent was distributed among other countries, the person said.