By Art Patnaude
The European market for new bonds was flush with activity
Tuesday, breaking the norm for a month known better for vacations,
as banks, government-related agencies and a Danish company all took
advantage of the positive tone that has persisted since the start
of the month.
The European Investment Bank committed to its third bond sale in
four days, with plans to issue a seven-year bond denominated in
dollars.
The issuer raised 1 billion euros ($1.23 billion) on Monday
through a tap of its Sept. 2021-dated bond, and EUR500 million last
Thursday through a tap of its March 2020 bond. On Aug. 7, the EIB
said it had raised EUR53.3 billion of the EUR60 billion it plans to
raise in 2012.
The latest deals come ahead of what credit analysts are warning
could be a difficult autumn, with concerns regarding the
euro-zone's sovereign debt crisis expected to return to the
fore.
Dutch public-sector agency Bank Nederlandse Gemeenten, or BNG,
was selling EUR1 billion worth of 10-year debt. Both BNG and the
EIB are rated triple-A by the major rating firms
As for companies, Danish shipping group AP Moller-Maersk A/S
(MAERSK-B.KO) was selling a seven-year bond denominated in
euros.
Banks were also taking advantage of the rally in credit to
continue with their recent rush of senior, unsecured bonds, which
were the former mainstay of long-term bank financing operations
before they fell out of favor due to the high costs during the
crisis.
Spanish lender Banco Santander (SAN.MC) was selling the first
senior, unsecured bond from a bank in one of the weaker euro-zone
countries since July, when Italian lender Intesa Sanpaolo sold
three-year notes. Santander's two-year debt won't be cheap, as it's
set to price at 390 basis points over midswaps, far more expensive
than the 250 basis points over midswaps the bank paid for a similar
five-year deal in March.
Elsewhere, French bank Societe Generale was set to price a
euro-denominated bond maturing in 2018 at 125 basis points over
midswaps.
The deals were brought amid yet another day of improvement on
the region's corporate credit default swap indexes. CDS function as
a form of protection against default for bondholders, with the
indexes acting as a gauge of investor sentiment.
The iTraxx Europe index of 125 investment-grade companies was
around one basis point tighter at 140 basis points, according to
data-provider Markit.
This was much tighter than the most recent high of 180 basis
points seen in mid-June. Since then, investors have expressed their
expectation that the weakest euro-zone countries will be provided
with adequate, official support to stem the ongoing crisis.
The Crossover index of 40 sub-investment grade companies was
seven basis points tighter at 563 basis points.
(Sarka Halas and Serena Ruffoni in London contributed to this
report.)
Write to Art Patnaude at art.patnaude@dowjones.com
