Author: Ben Beasley-Murray So far it has been a tough year for the European corporate bond market. An environment of rising interest rates, intensified event-risk anxiety and continued poor performance of the euro against the dollar have hampered new issuance. The previous year, by contrast, volume of issuance and demand for corporate euro-denominated paper easily exceeded expectations. Reports of the death of the market are exaggerated, however: although investors are not going to revert to what was sometimes undue enthusiasm, positive sentiment is returning.
Deutsche Telekom’s giant issue in June is a good indication that there is still ample demand for European corporate paper. The company launched a multi-tranche, multi-currency issue to the tune of $14.6 billion, almost double the amount initially planned. The deal exceeded by 49% the previously largest global bond offering, Tecnost International’s e9.45 billion ($9.77 billion) issue. As well as $1.4 billion worth of sterling and $853 billion of yen, e3 billion were sold by Deutsche Telekom, to fund expansion and the costs of buying third-generation UMTS mobile phone licences. At the end of July, Telekom bid for a cross-border acquisition, offering $50.7 billion for US telecom company Voicestream.