European Bond Market Falls Victim to Volatility as Third Sale in a Week Pulled

(Bloomberg) -- Market volatility scuttled two euro bond sales on the same day, as investors wrestle with Italian politics, Brexit and a U.S. Treasuries sell-off.

Bilfinger SE, a German maintenance provider, and Austrian lender Volksbank Wien AG both abandoned sales that were in the market on Thursday. Bahrain-based Gulf International Bank BSC separately opted against pursuing a planned dollar bond offering.

The pulled euro deals -- the third and fourth in about a week -- came after a spike in U.S. Treasuries yields rattled markets already contending with concerns about Italy’s budget and the U.K.’s looming departure from the European Union. The Treasuries sell-off has driven global investment-grade company borrowing costs to the highest since 2012, according to a Bloomberg Barclays index.

“The main driver is sentiment, which has taken a hit in the last few days due to Italy and Brexit,” said Martin Strohmeier, a corporate credit strategist at NordLB. “Investors are reserved, waiting to see the direction of travel.”

Italy and Brexit have helped make investors “more cautious,” Volksbank Wien said in an emailed statement. It earlier set a final coupon in its sale of about 150 million euros ($170 million) of additional Tier 1 notes, the riskiest form of bank debt.

Bilfinger abandoned a high-yield sale after earlier cutting the deal size to 250 million euros, according to a person familiar with the matter, who is not authorized to speak publicly and asked not to be identified. A company spokesman wasn’t immediately available for comment when called by Bloomberg News.

Electronic payments technology provider Ingenico Group SA and French lender My Money Bank have also both pulled deals recently.

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