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30-year euro corporate market
stampede short-lived |
THE 30-YEAR euro-denominated corporate bond market
suddenly rocketed into life at the start of this year but its
sparkle faded just as quickly.
The first e400 million deal from Olivetti, with a
7.75% coupon, hit the market on January 10. Just five days
later France Telecom followed with its first benchmark,
raising e1 billion. What followed was quite remarkable in a
new and potentially risky market: a surge of issuers rushed
to take advantage of investors' desperate thirst for yield in
a low-interest-rate environment. It seemed that even triple-B
issuers had it made - seeing unprecedented demand for a
maturity that would have been impossible to achieve a few
months ago - with every bond two or three times
oversubscribed.
This stampede culminated in e1.85 billion of issuance in the
first week of February. But by February 7, the euphoria was
replaced by what looked like an...
