Carlsberg A/S, (CARLB) the world’s fourth- largest brewer, and Dutch energy distributor Alliander NV took advantage of the lowest borrowing costs in 18 months to sell new bonds.
The beer maker sold 750 million euros ($955 million) of 10- year debt and added 250 million euros to its existing 2.625 percent bonds due 2019, according to data compiled by Bloomberg. It’s the company’s first debt sale since July.
The average yield on non-financial European company bonds fell to 115 basis points more than the safest government debt, the lowest premium since May 31, 2011, Bank of America Merrill Lynch’s EMU Corporates, Non-Financial Index shows. Bond sales are heading to at least 5.9 billion euros in the region this week, the most since 7.2 billion euros of debt was sold in the week ending Oct. 12, Bloomberg data show.
“Appetite for new issues has been strong in recent weeks so Carlsberg’s deal is a classic,” said Patrick McCullagh, the head of European credit research at Schroder Investment Management Ltd. in London, which oversees $63 billion of bonds.
Arnhem, Netherlands-based Alliander has 2.8 billion euros of debt outstanding, according to Bloomberg data, and today’s 400 million euros sale of 10-year bonds was its first issue since June.
Copenhagen-based Carlsberg’s 10-year bonds were sold through its Carlsberg Breweries A/S unit to yield 98 basis points more than the benchmark midswap rate, from an initially- marketed 110 basis-point area, according to the person with knowledge of the sale. That compares with a 118 basis-point spread on its existing 2019 bonds, Bloomberg data show.
Bank of America Merrill Lynch, BNP Paribas SA, Citigroup Inc. and Danske Bank A/S (DANSKE) led the sale.
The pricing “doesn’t look that generous,” CreditSights analysts told clients in a note. “We would be a holder but not an aggressive buyer of the new bonds.”
Getinge AB (GETIB), a Swedish sterilization-systems maker, will meet European bond investors next week before a potential high- yield sale, according to a person familiar with the arrangements.
In derivative markets, the Markit iTraxx Crossover Index of credit-default swaps linked to the debt of 50 mostly junk-rated European companies rose eight basis points to 533 at 4:05 p.m. in London, having earlier fallen as much as six basis points.
The Markit iTraxx Europe Index of credit-default swaps on 125 investment-grade companies rose 1.5 basis points to 131, according to prices compiled by Bloomberg. The Markit iTraxx Financial Index of swaps tied to the senior debt of 25 banks and insurers rose 0.5 basis point to 175.
Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A basis point on a contract protecting 10 million euros of debt for five years is equivalent to 1,000 euros a year.
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