Euro

A pair of borrowers have hit screens for euro benchmarks to be sold during Tuesday’s session, but another nipped in ahead of the rush to price on Monday.

Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark as of Thursday's close. The source for secondary trading levels is Interactive Data.

When Sanofi raised all €8bn of the funding it needed for its acquisitions of Ablynx and Bioverativ in March, much was made of how this showed the capability of the European market to take down large M&A financings. But if Europe is now so capable, why then did Bayer, one of Germany’s brightest corporate stars, take 75% of the €22bn of financing it needed to buy Monsanto from the US instead?

Issue Rating: Baa2/BBB-

Italy’s bonds suffered another day of rising yields on Thursday after the country’s government appointed Eurosceptics to head financial committees.

Telecom Italia became the first Italian corporate to sell a bond deal since the new Italian government was installed but found fates conspired against it as Italian government bonds fell throughout the day.

It was the deal the corporate bond market had been waiting for. German pharmaceuticals company Bayer had flagged a €22bn bond equivalent bond deal to finance its acquisition of Monsanto. The deal was executed efficiently in the dollar and euro markets, but what wasn’t expected was the wave of confidence that washed over the rest of the European corporate bond market as a result.

Volkswagen used the slipstream of the upbeat corporate bond market this week to print the largest corporate hybrid bond deal of the year to date. The dual tranche offering garnered €8bn of demand.

Spanish electricity utility Iberdrola has been one of the leading corporate issuers of green bonds and, on Thursday, it took its total green issuance to more than €7bn with its latest offering.

French toll road operator Autouroutes du Sud de la France kept up the positive tone in the IG corporate bond market with a 10 year deal on Thursday, which it was able to increase in size and price with a single digit new issue premium.

Bayer’s €5bn four-tranche corporate bond offering on Tuesday not only cleared the way for other issuers to approach the market, but the €22.5bn of demand gave four issuers the confidence to sell a variety of deals in Europe on Wednesday. €3.5bn was issued in the euro market and £1bn in sterling.

German pharmaceutical company Bayer's $15bn and €5bn issuance this week provided the first big M&A related issuance the euro investment grade corporate bond market has seen for three months. However, following a court ruling in the US on AT&T's planned acquisition of Time Warner, there is likely to be more to come. Investors are aware of the need for careful analysis however.