Yield hunt triggers short-lived stampede

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.