ISS Betting Draghi Will Disappoint Sells Bonds Before ECB Meetsby
Company made sure bonds were sold just before Thursday meeting
All economists surveyed by Bloomberg expect more ECB stimulus
The world’s biggest cleaning services provider has timed its first benchmark bond sale of 2015 to tap debt markets just before the European Central Bank meets.
That’s because ISS A/S, which is based in Denmark, thinks that waiting until after the ECB’s Dec. 3 meeting is too risky. It’s betting markets are pricing in more stimulus than President Mario Draghi will deliver.
“In our view there is a risk that the market will be disappointed,” ISS Head of Group Treasury Barbara Plucnar Jensen said in an e-mailed reply to questions. “We know that there are many expectations in the market of further quantitative easing announcements in connection with the ECB monetary policy meeting on Thursday.”
All economists polled by Bloomberg predict the ECB will add stimulus this week, most likely through a combination of a deposit-rate cut, prolonging the time frame for monetary easing, and an increase in the level of monthly bond buying.
Nordea, the biggest Scandinavian bank, said last week markets are pricing in an ECB deposit rate cut of 20 basis points. The median estimate in a Bloomberg survey of 44 analysts is for a 10 basis point cut to minus 0.3 percent.
On Monday, ISS Global A/S -- the unit through which ISS sells debt -- said it issued a 500 million-euro ($530 million) bond due 2021 as it took advantage of a record-low five-year euro swap rate. At 1.125 percent, the bond achieved the year’s lowest coupon for a Nordic mid-BBB rated issuer, according to Plucnar Jensen.
ISS also took “year-end investor activity into consideration” for the timing of the bond sale, she said.
“We made a conscious decision to secure our rates now, where we had certainty rather than after Thursday.”