Glencore Joins Airbus Selling Euro Bonds as Borrowing Costs FallJohn Glover
Glencore Xstrata Plc and Airbus Group NV are marketing bonds in Europe after borrowing costs for high-grade companies fell by the most in more than two months.
The world’s fourth-biggest mining company is selling a total 1.1 billion euros ($1.5 billion) of seven-and 12-year bonds through its Glencore Finance SA unit while the aircraft maker plans to issue 10-year notes through EADS Finance BV, according to people familiar with the deals. The average yield on the debt fell four basis points to 1.7 percent, the biggest one-day drop since Jan. 10, Bloomberg bond index data show.
Investors are growing more confident about the prospects for European companies amid signs the region’s recovery is on track, with growth in manufacturing and services staying close to the fastest since 2011 in March, according to the latest survey of purchasing managers. Demand is also being fueled by speculation the European Central Bank will keep interest rates at record lows until at least the third quarter of next year, according to economists surveyed by Bloomberg.
“If you’ve got the right names at the right price and the deal is properly marketed, it will go well,” said Simon Ballard, a strategist at National Australia Bank Ltd. in London. “There’s a lot of cash in the market, so there’s a lot of demand and there isn’t much supply so the market is very strong.”
Baar, Switzerland-based Glencore, which is also the world’s largest metals trader, last sold bonds in euros on Sept. 20, according to data compiled by Bloomberg. Airbus, based in Toulouse, hasn’t issued debt in the currency since August 2009, the data show.
Credit Agricole SA is joining UniCredit SpA and Societe Generale SA in planning additional Tier 1 bonds amid the busiest month for issuance of the riskiest bank debt since the market opened a year ago.
France’s third-largest bank has hired banks to arrange investor meetings in Europe starting March 27, according to a person familiar with the matter. It will be the lender’s second foray into the market after raising $1.75 billion in 7.875 percent notes in January, data compiled by Bloomberg show.
Also in the market today, German drugmaker Bayer AG is issuing 500 million euros of three-year floating-rate notes through Bayer Nordic SE while Swisscom AG, Switzerland’s biggest phone company, is marketing 500 million euros of 7 1/2-year bonds that will be secured on its senior unsecured loan notes, according to people familiar with the deals.
Essilor International SA, the world’s biggest maker of eyeglass lenses, is planning a debut issue of securities in euros, another person said. The Charenton-le-Pont, France-based company, which is rated A2 by Moody’s Investors Service, has hired banks to arrange investor meetings starting March 31.
Banca Monte dei Paschi di Siena SpA is marketing its first sale of senior unsecured bonds since September 2012, according to a person with knowledge of the sale. Italy’s third-largest lender is selling 1 billion euros of five-year notes which may be rated B2 or five steps below investment grade by Moody’s Investors Service, and BBB or two steps above junk, by Fitch Ratings.
The average yield on speculative-grade financial bonds in euros fell to a record 3.87 percent, according to Bank of America Merrill Lynch index data.
Non-European companies are also seeking to borrow in Europe. Prologis Inc., a U.S. developer of industrial real estate, hired banks to arrange a potential sale of bonds in euros through its Prologis European Properties unit, a person familiar with the matter said.
Cemex SAB, the largest cement maker in the Americas, is selling 300 million euros of seven-year notes that the Monterrey, Mexico-based company can buy back after three years, according to another person.
The cost of borrowing in euros instead of dollars approached the lowest in about five years, with the yield difference widening to 1.32 percentage points, according to Bank of America Merrill Lynch index data.