| April and May brought a touch of frost to Europe's corporate bond market. The market blossomed in 1999 with record issuance by European companies eager to tap the new liquidity of the eurozone. However, the spectacular increase in gross issuance last year has not continued in 2000. The year began with volumes down modestly compared with last year. Then in April the market suddenly went quiet. For several weeks after the Easter holidays investors seemed reluctant to buy any bonds issued by European companies. Several corporates postponed offerings planned for the second quarter, some came to market with more generous prices and others reduced the size of their issues. French retail group Carrefour, for example, took two goes to complete its planned 10-year e1 billion bond last month, first issuing e750 million on May 11 and launching a e250 million add-on two weeks later. French auto maker Renault issued a e400 million FRN, a little short of the e500 million it had hoped to issue. It is little wonder that investors are nervous about buying corporate bonds. Almost every day seems to bring bad news for bond holders as event risk - the catch-all danger that dealmaking or outside interference will make companies less creditworthy - strikes another European credit. |