Italian energy company Enel is preparing to sell close to $5bn (€3.6bn) worth of bonds by the end of this week to become the latest European company since AstraZeneca to test the depth of investor appetite for corporate debt amid still-turbulent markets.
AstraZeneca, the Anglo-Swedish pharmaceutical group, returned to the primary new issue market for the second time in a week yesterday when it sold €750m of 8-year bonds.
The sale, on which investor demand was three times higher than supply, came six days after the company sold close to $7bn of bonds proving certain companies can still secure billion-dollar financings despite broad credit market turmoil.
Lead managers Deutsche Bank, Citi, Credit Suisse and JP Morgan gave investors price guidance today on Enel’s 5-year, 10-year and 30-year bonds today and are expected to complete the sale by tomorrow at the latest.
Enel last accessed the primary new issue market in mid-June when it had to navigate rising volatility to sell €5bn of bonds. It was the largest sale from the European corporate sector since Spanish telecoms group Telefónica sold a €5.8bn of bonds last year.
Bond bankers in London said the tight pricing and estimated €2.5bn order-book for AstraZeneca’s bond sale on Wednesday highlighted that there is strong underlying demand for corporate debt.
Citi, Deutsche Bank, HSBC, Goldman Sachs and JP Morgan priced AstraZeneca’s €750m of bonds to give a spread of 70 basis points over the mid-swap rate, which was the lowest end of the price guidance.
The bond sales come in a week when credit markets have suffered from a renewed bout of nervousness among investors who have been waiting to see whether up to $100bn of short term commercial paper is successfully rolled-over or resold over the next couple of days.
The short-term debt markets have suffered their worst liquidity crisis in over 10 years during the last few months as fears grow over the true extent of the fallout from the sub-prime mortgage crisis in the US.
Source: efinancialnews.com
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