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Sfr4.9bn trade is largest European ECM deal since National Grid’s £7bn rights issue in 2024
Offer came as markets recovered and volatility fell
Abbott Laboratories plundered $20bn as it led a trio of drug companies which printed jumbo bonds as a deluge of supply in the dollar market ensured a red-hot end to the month.
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The euphoria that infused Europe’s corporate bond market from Tuesday to Thursday has cooled somewhat, although investors are still open for business. Bankers had said on Thursday that Friday would bring an interesting crop of deals, but there is only one, for paper company Mondi, rated Baa1/BBB+. -
Some investors are moving cash out of the sovereign, supranational and agency bond sector and looking to deploy resources in high grade corporate credit, thanks to improved valuations in that sector and the threat coronavirus poses to sovereign debt sustainability.
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Rating agencies are starting to feed through the impact of coronavirus into their ratings, starting a wave of downgrades which could push several large issuers out of investment grade territory, where they are eligible for central bank backing, into high yield, where no such support exists.
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Market participants are already questioning the legitimacy of new ‘expected loss’ accounting rules, with the eurozone, the UK and the US having all now softened the application of their standards for banks during the coronavirus crisis.
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Unusual or less traditional ways of trading bonds — via electronic platforms and exchange-traded funds — look set to come out well from the recent market turmoil.
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The coronavirus crisis has focused attention on how companies can get access to cash, and for many, that is a top priority. However, there are some that feel they have enough, and are going in the opposite direction: spending it for financial gain. Many, and even some banks, are considering buying back bonds at the current cheap prices.
