Europe’s New Bond Sales Top $100 Billion in Record-Shattering Week

(Bloomberg) -- Europe’s bond market is wrapping up its biggest week ever, with over $100 billion of new debt sales underscoring its status as a major global funding vehicle.

Issuers from China, Indonesia, Japan and the U.S. joined local borrowers in tapping Europe’s super-low funding costs and increasingly mature bond market, helping push sales for the week to 92.5 billion euros ($103 billion). U.S.-Iranian tensions also added extra impetus to the traditional year-start rush, as issuers dashed to get deals done before any market deterioration.

“It has been a remarkable week given the events in the Middle East,” said Frazer Ross, head of EMEA investment grade DCM syndicate at Deutsche Bank AG. “All areas of the market are functioning well.”

Sales in Europe are well ahead of the issuance in the U.S., where about $84 billion in new debt has been offered this week.

Demand from Europe’s bond buyers has shown few signs of decline, even with 2020’s blockbuster start coming after a record year for issuance in 2019. Secondary-market bond spreads have barely flickered amid this week’s deal deluge, and issuers including E.On SE, Banco Santander SA and Portugal drew large orderbooks.

The rush of deals this week has lifted 2020 sales ahead of 2019’s pace, after a relatively muted start to the year. The boom was partly promoted by companies bringing forward planned deals amid the Middle East tensions.

“A lot of issuers who were not minded to do anything a week ago, have now decided that they should do something in case the situation deteriorates further,” said Marco Baldini, head of European bond syndicate at Barclays Plc.

The front-loading of January deals, and the upcoming earnings seasons, suggests the sales pace may cool into next week. Still, there are more deals waiting to go in the pipeline including National Grid Plc and European Financial Stability Facility.

--With assistance from Paul Cohen and Allan Lopez.

To contact the reporters on this story: Hannah Benjamin in London at hbenjamin1@bloomberg.net;Priscila Azevedo Rocha in London at pazevedoroch@bloomberg.net

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

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