Tapping the bond market
LONDON, April 9 (Reuters) – Deutsche Telekom and miner Anglo American raised 2.5 billion euros ($3.9 billion) in the European corporate debt market on Wednesday, drawing strong demand for their 7-year bond deals.
Anglo American priced a 1 billion euro bond at 170 basis points over mid-swaps. With order books close to three times that level, it was able to tighten guidance from 170 to 175 basis points over mid-swaps.
Deutsche Telekom, Europe’s largest telecoms company by sales, saw demand of around 5 billion euros for its 1.5 billion euro bond which allowed it to tighten guidance twice. Final terms on the bond showed guidance at mid-swaps plus 155 basis points.
“Deutsche Telekom is a good credit. It’s just about the pricing with new deals and this seems attractive,” said Joe Biernat, head of credit research at European Credit Management.
“There is cash in the market that is looking to be put to work. As long as things are priced reasonably, we’re interested.”
Deutsche Telekom said earlier the proceeds of the bond sale — issued via Deutsche Telekom International Finance which is rated A- by Standard & Poor’s and A3 by Moody’s Investors Service — will be used for normal liquidity purposes.
The Deutsche Telekom bond was managed by ABN, Deutsche Bank and Morgan Stanley were joint lead managers.
Barclays Capital, BNP Paribas and Royal Bank of Scotland managed the sale for Anglo American, also rated A- by Standard & Poor’s. The company is rated A2 by Moody’s Investors Service and A by Fitch Ratings.
The primary market has seen a strong pick-up in issuance in recent weeks as a Federal Reserve-led rescue of investment bank Bear Stearns last month helped lift sentiment and drive credit spreads significantly tighter.
“There is a large pipeline of deals waiting to get done, it’s good to see the new deal flow,” said Biernat. “It will help bring the market back to normalised trading and bring confidence back to the market. It’s all very positive.”