Corporate bond market issuance hits 2009 levels

THE MARKET for top European corporate bond issues has continued its recovery to hit its highest year-to-date point since 2009.

The value of investment grade corporate debt issued reached €86.68bn (£70bn) for the year to 12 June, up 38.6 per cent from the same period last year, according to Thomson Reuters.

German car group Porsche was the top fee payer – an indicator of the size of the issues – on €14.7m.

It was followed by Enel, Italy’s largest utility company, on €9.8m, and Saint-Gobain, the major French building materials groups, on €8.2m.

The report, which suggests companies struggling to borrow from banks are turning to capital markets for fundraising, comes after months of turmoil over sovereign debt levels in the Eurozone.

The previous high at this point of the year was in 2009, when turmoil raged in the global banking sector and proceeds hit €185.56bn.

Industrial firms made up the largest sector share this year with 32.3 per cent, the data showed.

The average coupon rate is currently 3.9 per cent, compared to 4.6 per cent last year and the lowest level since 2005, when it was 3.7 per cent.

The top borrower nation was France, with 29.9 per cent, followed by Germany with 18.8 per cent of the issuance, and Italy, on 9.5 per cent.

“A lot of issues have been over-subscribed so there are no reasons for levels to drop,” said Lucille Quilter, deals intelligence analyst at Thomson Reuters. “Investors are looking for low risk and are returning to high quality corporates... Borrowing costs are not at an all-time low, but they are at a low.”