Europe

The European Central Bank's loose monetary policy was supposed to ease financing terms for smaller and riskier companies. The high yield bond market's appetite for such issues has been limited — but it is hotting up, just as the ECB signals tightening.

Public sector borrowers are staying conservative in the dollar market this week, opting for short dated trades or floating rate notes. The trend is likely down to issuers having one eye on expected Federal Reserve rate increases in the US, said bankers.

The UK Debt Management Office broke yet another record on Tuesday, building its largest ever book in cash terms for an inflation linked syndication. The demand was such that the bond then tightened in secondary to move past the fair value level at the book open, said one of the leads.

SNCF Réseau launched its first 30 year green bond on Tuesday, following the example set by European Investment Bank at the end of June. KfW was also out in euros with a long 15 year — and more borrowers might be tempted to bring euro deals at the long end, said bankers.

Bright Food launched a three year euro bond in Asia on Tuesday, setting initial guidance at 140bp over mid-swaps. The Chinese food and drink producer had roadshowed for a three or five year issue in Asia and Europe last week.

Corporate issuers of triple-C rated bonds have finally found a reason to enter the primary market, as investor expectation over the chances of the European Central Bank raising rates has opened a window for them in July.

On Tuesday Nestlé issued its first bond since announcing a Sfr20bn (€18bn) share buy-back programme last month. Three rating agencies cut the Swiss foods group's rating after the announcement, but there was no discernible drop in demand for this transaction.

Carillion’s share price fell roughly 40% after bleak profit warnings on Monday, and another 33% on Tuesday. The UK outsourcing and construction company's tumble comes only five months after it successfully issued a €112m — confirming for some that the market has become too open to unsuitable borrowers.

Swissport Group announced on Tuesday a technical capital restructuring following its breach on certain debt covenants. The restructuring includes a new €460m term loan ‘B’ and the repayment of its existing €660m term loan ‘B’.

HSH Nordbank issued a tightly priced €500m three year Pfandbrief on Tuesday. The transaction illustrates confidence in the safety of the Pfandbrief market, though little about conditions at the issuer.

Five new high yield offerings, including the biggest floating rate note seen in Europe so far this year, entered the market this week. The FRN is a sign that frontiers are becoming blurred between different leveraged finance markets for debt buyers, said bankers.

France's Banque Fédérative du Crédit Mutuel (BFCM) was looking to add to a recent flurry in the dollar market on Tuesday, opening books on two tranches of senior debt.