A SPATE of corporate giants shrugged off European jitters yesterday to tap the bond markets for billions of euros in cash.
Luxury brand owner Kering – which owns well known labels such as Gucci, Alexander McQueen and Stella McCartney – and the world’s largest postal service Deutsche Post both raised substantial loans from investors despite concerns over Italy’s fragile political state.
Kering said it raised €500m by issuing IOUs to investors that are due to be repaid in five years time.
It will pay an interest rate of 1.875 per cent, making it slightly riskier than borrowing money from the UK government.
Deutsche Post, which has its main business delivering mail in Germany, raised €500m from bonds due to be paid in five years at 1.5 per cent. It raised a further €500m from loans due to be repaid in ten years. These have an interest rate of 2.75 per cent, putting it on par with the UK’s borrowing risk.
Australian toll road developer Transurban Group also entered the fray yesterday, raising €500m through bonds due to be repaid in the year 2020.
The resurgence in the European corporate bond market follows a freeze following the financial crisis when investors struggled to raise cash from investors using bonds.
Yesterday’s healthy bond markets were in stark contrast to worried equity markets, which fell across Europe thanks to Italian political strife. The FTSEurofirst 300 fell 0.6 per cent due to a 1.9 per cent fall in Italy’s blue chip index the FTSE MIB, following frictions in Italy’s fragile coalition government due to factions on the right.