European bond deals sink in Q3, upturn eyed -Thomson
By Natalie Harrison
LONDON, Sept 21 (Reuters) - Investment-grade bond issuance in Europe fell 54 percent in the third quarter from the same period a year ago, data from Thomson Financial shows, but a resurgence in primary issuance in recent days points to a brighter outlook.
Overall, European corporate bond issuance fell 76 percent in the third quarter compared with the second quarter and 67 percent from the same period a year ago, Thomson Financial data showed on Friday.
Year-to-date activity totals $160 billion, down 16 percent from January to September 2006.
But investors and strategists said the recent cut in U.S. interest rates, which has breathed fresh life into the European primary market, should see issuance pick up further in coming weeks.
Highly-rated German chemicals firm BASF AG (BASF.DE) and utility E.ON AG EONG.DE are among those that have brought new deals to the market in the past few days. The latter was even able to raise the size of its sale by 1 billion euros to 3.5 billion, with books more than three times oversubscribed.
Neither the BASF or E.ON deals were included in the Thomson Financial figures.
Drugmaker AstraZeneca Plc (AZN.L) also brought a 750 million euro bond deal to the table last week, having issued a mammoth $6.9 billion in bonds earlier this month -- the largest issue by a European corporate this year according to Thomson Financial.
HIGH-YIELD UNCERTAINTY
Italian utility Enel (ENEI.MI) sold the second biggest European debt issue, a 5 billion euro deal that emerged in early June, just escaping the credit market crisis. The debt sale, to help finance its acquisition of Endesa (ELE.MC), was at least twice oversubscribed.
But while the outlook for high-grade corporate issuance looks promising, there is more uncertainty over whether the backlog of $300 billion-plus of high-yield loans can be placed.
High-yield issuance in both the United States and Europe came to a standstill in the third quarter, Thomson Financial said, as the financial market crisis and higher funding costs deterred riskier corporates from tapping the market.
Yet year-to-date activity in European high-yield issuance is still up 4 percent from the same period a year ago. That follows a strong supply of bonds in the first half and historically low credit spreads before the debt market crisis kicked off in mid-June.
In the league tables, Citigroup (C.N) held on to top spot among global bond lead managers year to date, while Deutsche Bank (DBKGn.DE) and JP Morgan (JPM.N) retained second and third place respectively.
However, Citigroup fell to third from first place in the European bond lead managers table, replaced at the top by Deutsche Bank.
