Euro bonds slide as firms pick sterling

EUROPEAN bond issuers are turning away from euro denominated securities in favour of sterling, dollar and ruble products.

Overall bond issuance by European corporates has increased so far this year by 17 per cent to $182.5bn (£113bn), according to data provider Dealogic. But issuance of euro-denominated bonds so far this year has slumped by 13 per cent to $83bn.

European firms have instead piled into the sterling-denominated bond market, where the total value of bonds issued has shot to $18.8bn so far this year.

Meanwhile, issuance in dollar-denominated bonds has continued to rise, despite the weakness and volatility of the currency.

The total value of dollar bonds issued so far this year is now at $56bn, up from $37bn at the same point a year earlier.

Bonds issued in rubles have also seen a spike in popularity. The total value of ruble bonds so far this year is $10bn, up from $3.8bn a year earlier.

“It’s difficult to pin a reason apart from a lack of issuance in sterling last year,” said Ariel Bezlel, manager of Jupiter Asset Management’s strategic bond fund.

BOND ISSUANCE TRENDS

Year to 19 May 2011
Euro: $83bn
US dollar: $56bn
GB pound: $19bn
Russian ruble: $10bn
Year to 19 May 2010
Euro: $96bn
US dollar: $37bn
GB pound: $8bn
Russian ruble: $4bn