Eurozone Corporate Bond Market Revives Following Summer Break

Fixed Income | With this summer’s Greek debt crisis having abated somewhat and the European Central Bank (ECB) considering expanding its easy-money policies, US companies are rushing to the eurozone to issue debt at record-low interest rates.

Wells Fargo and American Honda Finance both issued euro-denominated bonds in the first week of September, as the market suddenly awakened from the summer doldrums.

Coca-Cola’s $9.5 billion issue of euro-denominated bonds in February was the largest ever by a US issuer in the single currency. For the year to date, US-based companies have accounted for 22% of euro-denominated bond issues—more than any other country, according to Dealogic.

European companies were also active issuers in early September. Ireland-based food processor Kerry, French utility Suez Environnement and UK-based truck manufacturer Scania, all issued euro-denominated bonds. Dutch brewer Heineken sold its first euro benchmark issue since March 2013.

Bankers say there is a large backlog of corporate bond issues waiting to come to market in the eurozone. Some of these deals were delayed pending the outcome of the Greek bailout negotiations in July and August.

Meanwhile, ECB president Mario Draghi said following the central bank’s meeting on September 3 that the outlook for economic growth and inflation in the eurozone had worsened. He said inflation could turn negative in coming months, instead of rising toward the bank’s 2% target, and he hinted that quantitative easing would be stepped up, if necessary.