Solid Demand Greets Europe’s First Debt Sales After Trump Win
(Bloomberg) -- Investors are jumping back in Europe’s debt market, with a trio of deals amassing orders for more than three times their combined size as activity resumes following Donald Trump’s US election win.
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Bids for offerings from Intesa Sanpaolo SpA, Societe Generale SA and Bureau Veritas SA have reached more than €11.45 billion ($12.35 billion) combined the latest data shows, according to separate people with knowledge of the deals, who asked not to be identified as the information is private.
The new deals snap a two-day dry spell for debt sales in the region amid Tuesday’s US presidential election, with Bureau Veritas’s trade also marking Europe’s first non-financial debt offering in a week, data compiled by Bloomberg show. Still, investors may need to be patient should Germany’s political situation worsen, with Chancellor Olaf Scholz calling for a snap election after the collapse of the coalition government.
The US election result “will clear the way for a pickup in issuance,” said Gordon Shannon, a portfolio manager at London-based TwentyFour Asset Management. “While it’s not the last election this year, I think we all consider that to be a lot of uncertainty out of the way.”
Yet he cautioned about the situation in Germany and while it’s “not going to inject uncertainty of the same scale, given the economic weakness we’re seeing it definitely adds another hurdle to risk-taking,” Shannon said.
Italy’s Intesa Sanpaolo has drawn more than €3 billion of orders for a €1.25 billion Tier 2 note, in what is a solid showing of investors’ appetite for riskier debt following the election. It will price the notes at 195 basis points above midswaps and inside an initial target of about 220 basis points.
France’s Societe Generale has pulled in more than €7.1 billion of combined orders for two euro senior non-preferred notes due in 2027 and 2030, with the longer tranche proving most popular. Meanwhile, Bureau Veritas has received over €1.35 billion of bids for a €500 million sale of seven-year notes, according to separate people with knowledge of the deals.
Credit markets rallied on Wednesday on investors’ expectations of tax cuts and lighter regulation, setting the tone for a resumption of global debt sales. High-grade issuance in the US had also ground to a halt, with the last offering in that market on Nov. 4.
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