Bond Sales Swell in Europe as Brexit Market Turmoil Recedesby
Three companies are offering euro-denominated bonds, totaling more than 1.3 billion euros ($1.4 billion), as market turmoil following the U.K.’s vote to leave the European Union eases.
U.S. life-sciences company PerkinElmer Inc. is selling 500 million euros of 10-year notes, partly to repay debt, according to a person familiar with the matter, who asked not to be identified because they aren’t authorized to discuss the offering. German railroad Deutsche Bahn AG is marketing 350 million euros of zero-coupon bonds and Belgian utility Resa SA is offering 500 million euros of notes, separate people familiar said.
Investors are becoming less concerned about the fallout from the Brexit decision due to support from central banks and the unexpectedly quick selection of a new U.K. prime minister. Bond-buying by the European Central Bank has also helped cut borrowing costs for investment-grade companies to record lows.
“The market is the closest to normality that it has been in several weeks,” said Anthony Peters, a strategist at Sol Capital Market. “We’ve still got the ECB behind us buying and as long as we have the ECB there, there will be a fairly consistent demand.”
The Deutsche Bahn offering was increased from 250 million euros, the person said. A company spokeswoman confirmed that the railroad was selling five-year notes. Officials at Waltham, Massachusetts-based PerkinElmer couldn’t be immediately reached outside business hours for comment on the company’s bond sale.
Resa’s sale comprises 10-year, 15-year and 20-year bonds, and it was increased from an initial 300 million euros, a person said. Calls and e-mails to Liege, Belgium-based Resa’s press office about the sale weren’t immediately answered. The company said on July 1 that it was readying a sale of euro notes.
The average yield on highly rated corporate notes in euros has fallen to 0.8 percent, according to Bank of America Merrill Lynch index data. The cost of insuring investment-grade corporate debt dropped to the lowest in more than a month, reversing a post-Brexit surge, based on the Markit iTraxx Europe index of credit-default swaps.