Deutsche Bank Sees ‘Sellers Market’ Continuing for European Debt

(Bloomberg) --

Borrowers have never had it so good in Europe’s red-hot bond market, according to Deutsche Bank AG‘s most senior seller of new debt for the highest quality companies in Europe, the Middle East and Africa.

“It is a seller’s market at the moment,” Frazer Ross, the bank’s head of EMEA investment grade debt capital markets syndicate, said at a briefing in London this week.

That means Europe’s record-breaking run of bond sales this month should continue unabated for at least the first half of the year, Ross said.

Central bank policies to prop up growth with cheap money have sent bond markets soaring in recent years, prompting many corporations to binge on debt at record low cost. European issuance is currently running at its fastest pace ever with little sign that it will cool any time soon.

Read More: Europe Bond Sales Top 200 Billion Euros

Companies are likely to start issuing longer-term debt, which in more normal conditions can be tougher to sell, Ross said. Longer duration on a bond means more time for borrowers to suffer setbacks that might affect their ability to pay it back.

However, the outlook for the second half of the year is less clear, Ross said, noting a potential dampening impact from events like the U.S. presidential elections in November.

And while the year has gotten off to a rapid start, Deutsche bank does not see annual volumes beating the 620 billion-euro ($684 billion) record set in 2019. Overall sales of high-grade bonds will decline by 10% this year to about 560 billion euros, the bank forecasts, Ross said.

For now, new issues from Finland’s Elenia Finance to Korea Housing Finance are expected to keep the market going, aside from bumper sovereign syndications from France, the U.K. and Finland.

To contact the reporters on this story: Tatiana Darie in London at tdarie1@bloomberg.net;Priscila Azevedo Rocha in London at pazevedoroch@bloomberg.net;Irene García Pérez in London at igarciaperez@bloomberg.net

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

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