Peugeot Readies Junk Sale Adding to Signs of Life in Marketby
Peugeot SA is preparing a junk-bond sale, stoking optimism about a pickup in high-yield issuance.
The automaker is assessing the market for a possible offering, company spokesman, Pierre-Olivier Salmon, said without providing further details. Auto-parts maker LKQ Corp. is marketing 500 million euros ($570 million) of eight-year bonds, according to a statement on its website.
Junk-bond issuance is stirring on both sides of the Atlantic following an anemic first quarter, partly because the European Central Bank’s plan to start buying investment-grade corporate debt is driving investors into riskier assets. Numericable-SFR SA on Wednesday sold $5.2 billion of junk bonds, the biggest single issue worldwide this year, after twice expanding its sale.
“The market tone has improved greatly since the ECB announced it will buy corporate bonds,” said David Ennett, the head of European high yield at Standard Life Investments, which manages about 250 billion pounds ($350 billion). The plan has boosted investment-grade debt prices and pushed “some investors down the credit spectrum in the hunt for yield,” he said.
Peugeot may sell seven-year notes denominated in euros, according to a person familiar with the matter, who asked not to be identified because they aren’t authorized to reveal the information.
Average yields on euro-denominated speculative-grade debt have declined to 5.11 percent, based on Bank of America Merrill Lynch index data. They were 5.66 percent on March 9, the day before the ECB announced it would add investment-grade corporate debt to its bond-buying program.
The last junk-bond offering in euros was on March 23, when Fiat Chrysler Automobiles NV raised 1.25 billion euros, according to data compiled by Bloomberg show. Total sales this year are down 68 percent at 7.7 billion euros, according to the data.