Europe’s Bond Market Sets Record With $36 Billion of Deals

(Bloomberg) -- Europe’s primary bond market had a record-setting day, with at least 32.7 billion euros ($36 billion) of deals, as the Iran crisis failed to damp the usual early-January rush.

Ireland and Portugal both sold 4 billion-euro sovereign notes, after each drew more than 20 billion euros of orders, according to separate people familiar with sales, who asked not to be identified because they’re not authorized to speak about them. The Netherlands’ BNG Bank NV issued a 2 billion euro note.

Carmaker BMW AG brought the year’s first multi-part euro corporate deal, alongside about a dozen bank bonds, as the primary market racked up almost 60 billion euros of offerings in just two days. The post-holiday flood reflects investors’ struggle to find yield and issuers’ eagerness to kickstart annual funding plans before risks such as the Middle East and Brexit potentially scupper low borrowing costs.

It makes sense “to frontload issuance, given how tight spreads are,” said Piers Ronan, head of financials debt syndicate at Credit Suisse Group AG. “Consensus is that it’ll be a stable year, where spreads if anything grind tighter, but everyone recognizes there’s meaningful downside risk.”

Low rates and investor appetite helped Ireland and Portugal cut borrowing costs versus early 2019. Portugal priced its long 10-year note at 33 basis points above midswaps after paying 112 basis points on a similar deal a year ago. Ireland’s long 15-year bond had a tighter spread than a long 10-year note sold in January 2019.

Euro investment-grade notes yield less than 0.5%, according to a Bloomberg Barclays index.

German rail operator Deutsche Bahn AG and French utility Veolia Environnement SA also sold euro bonds on Wednesday as corporate activity picks up following a relatively slow start to the year. A unit of telecommunications provider Altice Europe NV will close books on two euro notes.

Wednesday’s deal list also included notes of 1 billion euros or more from Santander UK Plc, UniCredit Bank AG and Finland’s Municipality Finance Plc.

To contact the reporters on this story: Alice Gledhill in London at agledhill@bloomberg.net;Neil Denslow in London at ndenslow@bloomberg.net

To contact the editors responsible for this story: Hannah Benjamin at hbenjamin1@bloomberg.net, V. Ramakrishnan

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