Honeywell Sells Euro Bonds for Takeover as Market Turmoil Abates

Honeywell International Inc. sold 4 billion euros ($4.5 billion) of bonds in the year’s biggest corporate sale in the single currency, with the proceeds helping to repay debt used to buy meter-maker Elster Group SE.

The maker of jet engines to gas detectors sold fixed- and floating-rate notes with maturities ranging from two to 12 years, according to data compiled by Bloomberg. 

Honeywell’s first euro offering since 2001 takes advantage of a recovery in investor demand for corporate debt after weak bank earnings and a global market rout all but closed credit markets last week. The cost of insuring Europe’s corporate bonds against default fell for a second day on Monday on optimism central banks will act to counter the rout in financial markets.

“The first issuers seeking to tap the market are at the more conservative end of the spectrum,” Mark Dowding, co-head of investment-grade debt at BlueBay Asset Management, which oversees $58 billion. “The macro backdrop for markets continues to be relatively fragile and the factors which were driving markets weaker over the last couple of months have not suddenly disappeared.”

Officials at Morris Township, New Jersey-based Honeywell couldn’t immediately be reached for comment on the bond sale. U.S. markets are closed for a public holiday. Honeywell made acquisitions of about $6 billion in 2015, including its $5.1 billion purchase of Elster, which closed at the end of December.

The four-part deal comprised two portions valued at 1 billion euros each, one at 1.25 billion euros and another at 750 million euros, according to Bloomberg data. Proceeds of the sale will be used for acquisition financing and general corporate purposes.

The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies fell to 115 basis points, after reaching a more than two-year high of 124 basis points last week, according to data compiled by Bloomberg.

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