Europe Bond Sales to Blast Past 1 Trillion Euros in Record Time

(Bloomberg) -- Sales of new bonds in Europe will pass 1 trillion euros ($1.1 trillion) on Thursday, earlier in the year than ever before as companies take advantage of ultra-low borrowing costs ahead of potential year-end volatility to raise funds.

BT Group Plc, Continental AG and Snam SpA joined the deluge on Thursday, fanning what may be the busiest week for corporate issuance since March 2018. The day’s 13 offerings marketwide will also likely lift sales for the year above 1 trillion euros, about six weeks earlier than last year and two weeks quicker than 2017’s record, according to data complied by Bloomberg.

Corporate treasurers may have rushed forward sales plans after the summer slowdown as they weigh looming risks including Brexit uncertainty, trade wars and growing recession fears. Euro investment-grade borrowing costs are also below 0.3% even after creeping up from a record-low 0.23% last week, according to a Bloomberg Barclays index.

“Very easy funding conditions” are luring borrowers to the market, said Viktor Hjort, global head of credit strategy at BNP Paribas SA. “Brexit may be a factor, but only to bring forward already planned funding.”

The 2019 sales boom has run since January, when high-grade euro corporate deals surged 50% from a year earlier. Marketwide volume topped 221 billion euros, according to Bloomberg data. The best start to a year since at least 2014 was partly due to Brexit, which was then scheduled for March.

Borrowing costs have declined this year due to economic concerns sparking expectations for possible central-bank easing. That’s helped fuel a rebound in U.S. borrowers selling euro notes including jumbo deals from Medtronic Plc and Fiserv Inc. in June, and from Danaher Corp. and AT&T Inc. this week. Another may soon follow as Schlumberger Ltd. has mandated a three-part euro sale.

Read more: Medtronic Prices Second Jumbo Euro-Bond Deal This Year

BT, Snam and Blackstone Property Partners Europe Holdings Sarl are all offering two-tranche deals on Thursday that will raise at least 1 billion euros apiece. BT is marketing six-year and 10-year notes, with initial pricing talk on the longer tranche at about 155 basis points over midswaps, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.

--With assistance from Tasos Vossos.

To contact the reporter on this story: Hannah Benjamin in London at hbenjamin1@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Neil Denslow, Hannah Benjamin

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