But with already tight spreads having tightened further over Christmas, corporate borrowers have an attractive window of opportunity to get funding done before earnings blackouts set in.
Bankers hoped Wednesday would bring the first new issue, and so it has, courtesy of Danone, which has announced, interestingly, a €500m five year floating rate note and a benchmark-size 10 year fixed rate bond.
The deal is surprising in two ways. First, January issuance is usually started by one of the big German or French car makers. Danone is a less frequent issuer, which raised about €2.9bn in 2013 but only issued a €150m MTN last year.
Second, the combination of tranches is unusual. The 2014 FRN revival had petered out in recent months, perhaps partly because interest rates are seen as more likely to fall than rise in the eurozone. Pairings of seven and 12 year fixed rate bonds were the go-to combination last year. But a €500m five year FRN is quite bold — something few companies would have tried, a year ago.
Bond bankers are also cheered to see that the trend of non-European issuers funding in euros is continuing, with Chinese state-owned utility company State Grid due to start a roadshow for its first euro issue on Monday January 12.
Hopes that January would bring a hot batch of high yield issues have yet to be fulfilled. No deals have been launched, though bankers have several in the hopper, waiting for the right moment.
Events in Greece are not helping them. The resurgence of Grexit fears has helped to keep the market on the back foot.
It does not help either that some deals seen as sure bets for the first quarter, like bonds for Altice’s takeover of Portugal Telecom buyout, have encountered obstacles. On Wednesday, the local press said the decisive shareholder meeting due on January 12 could be delayed.
One issuer having the courage to take the plunge might go a long way to emboldening others.
In leveraged loans, there is a big and clear pipeline of jumbo deals, but none have been launched yet.
Debt financing packages for the buyouts of SIG Combibloc for €3.75bn by Onex and Portugal Telecom’s Portuguese assets for €7.4bn are expected to be launched in the next fortnight.
Also in line are €315m of loan facilities backing Macquarie and Wren House Infrastructure Management’s acquisition of E.On’s Spanish and Portuguese electricity businesses. The borrower is expected to request more debt from the market for the deal.
Mid-market activity is also revving up. Angus Chemicals, the US nitroalkanes manufacturer, is unveiling a €150m term loan to lenders at a West End meeting on Thursday. Also expected to come is a £390m cov-lite loan backing CVC’s buyout of Sky Bet.
Dan Alderson, syndicated loans editor +44 207 779 7311
Jon Hay, corporate finance editor +44 207 779 7321
Olivier Holmey, equities +44 207 779 7326
Victor Jimenez, high yield +44 207 779 7379
Ross Lancaster, leveraged loans +44 207 779 7322
Richard Metcalf, corporate bonds +44 207 779 7315
Elly Whittaker, investment grade loans +44 207 779 8361
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