Ferrari Bonds Advance After Debut Sale on `Trophy Asset' Allure

Ferrari NV bonds rose as investors shut out of the supercar maker’s debut sale on Wednesday bought the notes in the secondary market.

The 500 million euros ($550 million) of seven-year unrated bonds were quoted at about 99.5 cents on the euro, up 0.5 cents, according to data compiled by Bloomberg.

“Who doesn’t want to own Ferrari?” said Paul Sutter, a London-based fixed-income trader at ECM Asset Management. “The issuer has significant brand recognition and operates in a luxury sector, which has some resilience -- you would think this is viewed as a trophy asset.”
Ferrari joined Warren Buffett’s Berkshire Hathaway Inc. and Petroleos Mexicanos in selling euro bonds this week, lured by declining borrowing costs and speculation of more European Central Bank stimulus. The bonds were sold to yield 140 basis points more than benchmark rates, from an initial 160 basis points, according to a person familiar with the matter at the time. That compares with an average spread of 127 basis points on investment-grade euro bonds, according to Bank of America Merrill Lynch Index data.

Asset managers bought 45 percent of the Ferrari bonds, insurers and pension funds purchased 31 percent and banks 21 percent, according to a person familiar with the matter, who is not authorized to speak publicly and asked not to be identified. Italian investors accounted for almost a third of the debt. 

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