Finmeccanica Sells Euro Bonds as Junk Yields Decline to New LowKatie Linsell
Finmeccanica SpA sold bonds in euros as borrowing costs for junk-rated issuers fell to a record low in Europe.
The Italian aerospace and defense company issued 700 million euros ($948 million) of notes due January 2021 to yield 4.75 percent, according to data compiled by Bloomberg. The average yield investors demand to hold speculative-grade corporate debt in euros dropped 14 basis points this month to 4.98 percent, Bank of America Merrill Lynch index data show.
Borrowers are taking advantage of demand for riskier debt spurred by record low interest rates. European Central Bank board member Benoit Coeure said today the ECB may even make its deposit rate negative if more stimulus is needed to increase inflation, which stayed close to the lowest in four years at 0.8 percent in November, according to economists’ forecasts in a Bloomberg survey.
“The ECB remains interested in keeping monetary policy as accommodative as possible and recent actions have been geared towards that,” said Garland Hansmann, a London-based high-yield fund manager at Intermediate Capital Group Plc, which oversees about 13 billion euros. “People are still firmly seeking higher yields and that should continue to support the market early next year.”
Also in the high-yield market today, Autobahn Tank & Rast Holding GmbH, a German highway services chain owned by Terra Firma Capital Partners Ltd., issued 460 million euros of seven-year notes, according to data compiled by Bloomberg. The securities, which can be bought back by the Bonn-based company after three years, were priced to yield 6.75 percent.
Italian online gaming company Snai SpA is selling 160 million euros of senior subordinated notes and 300 million euros of senior secured bonds, said a person with knowledge of the transaction, who asked not to be identified because they’re not authorized to speak about it. It will be the Porcari-based company’s first bond sale, according to data compiled by Bloomberg.
Snai’s five-year subordinated bonds will be priced to yield about 12.25 percent to 12.5 percent while the 4 1/2-year notes will yield 7.75 percent to 8 percent. Both securities can be redeemed by the company after two years.
Uranium One Inc., a Canadian miner acquired by Russian state nuclear company Rosatom Corp. this year, has hired banks to arrange investor meetings in Europe and the U.S. starting tomorrow, a person familiar with the matter said. A bond sale would be the first in euros for the Toronto-based company, which is rated three steps below investment grade at BB- by S&P, according to data compiled by Bloomberg.
The cost of insuring high-yield corporate debt in Europe is little changed at a six-year low, with the Markit iTraxx Crossover index of credit-default swaps on 50 junk-rated companies at 325 basis points at 3:36 p.m. in London.
Telekom Austria AG, the European network operator part-owned by America Movil SAB, sold 750 million euros of eight-year bonds through its Telekom Finanzmanagement GmbH unit, according to data compiled by Bloomberg. The notes yield 155 basis points more than the mid-swap rate.
Dover Corp., a U.S. industrial products manufacturer, issued 300 million euros of seven-year notes at a spread of 68 basis points over swaps, according to data compiled by Bloomberg. It’s the Downers Grove, Illinois-based company’s first bond sale in euros.
In the sterling market, Greater Gabbard OFTO Plc, a borrower seeking to purchase a transmission asset connected to a wind farm off the coast of Suffolk, England, sold 305 million pounds ($493 million) of 19-year notes yielding 125 basis points more than similar-maturity government debt, according to data compiled by Bloomberg.
The sale was part of the European Investment Bank’s Project Bond Initiative, which promotes financing for infrastructure projects. The Greater Gabbard wind farm is a joint venture between SSE Plc, the U.K.’s second-biggest energy supplier and RWE AG, Germany’s second-largest utility.