Activity on the debt market has resumed earlier than usual this year. After the traditional “summer break”, companies usually resume their bond issues in the first days of September. However, on this occasion, companies ended the holiday period earlier. and they did not want to wait, even though they were expected to lower official interest rates again next week, thus improving possible financing conditions. The last half of August was particularly active in Europe.
Investments have accelerated especially in the last week, “as if it were the one that in other years had corresponded to this one that is starting, as if everything had been brought forward a few weeks”, explains Jesús Sáez, head of DCM Iberia at Natixis CIB. Issues in euros of public and private debt have reached 56 billion euros, according to IGM data, and the expert highlights the 20 billion raised by the corporate sector in 30 issues and the 15,000 financed by the financier in 17 operations, that is “the most active week of the last 15 and one of the most active of the year“. Already during the previous one, on August 3, some 31 billion dollars were recorded placed by the various issuers (companies, state banks and public entities).
When the market reopened, large European companies and banks such as BNP Paribas, ING, BMW or Diageo closed their debt issues. In Spain, too, some investments have already been observed in companies listed on the Ibex 35. Repsol resumed its activity with the launch last week of 10-year bonds worth 850 million euros, receiving three times the demand and paying a coupon of 3.625%. BBVAfor its part, returned on August 21 with a subordinated debt issue Level 2 at 4.375% with which The bank has fully implemented its financing plan for this year. Santander, on the other hand, opted this Monday for an issue in pounds. Beyond those listed, other Spanish companies such as Cajamar also went to the financial markets in the last days of August.
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Fixed income securities are already pricing in the upcoming interest rate cuts that will be made by the European Central Bank (ECB) after it began easing its monetary policy in June, leading to a drop in the yields at which debt is issued. Investors have anticipated this move and in recent months there has been a strong appetite for fixed income securities in order to obtain the highest yields, which has benefited companies.
Spanish companies have accelerated the issuance of debts in the first half of the year, so that in six months they have carried out between 75 and 80% of the financing programs they had for the entire year, according to various experts consulted, who contextualize that these figures are much higher than usual since in the first half of other years, companies usually carry out around 60% of the work.
Companies did not want to wait until the end of 2024, even though a rate cut could improve their situation, because there is a risk that there will also be a More uncertainty ahead of US presidential electionwhich can widen spreads (or spreads) that investors demand on the financial markets. “The US elections will be the key event of the coming months. The rise in the polls of the Democratic duo Harris/Walz will lead to a more uncertain and volatile second half of the year,” says Nicolas Bickel, CIO of Edmond de Rothschild Private. The banking sector, even if he also emphasizes it because, for investors, “market shocks remind us of the benefits of portfolio diversification, as well as the defensive nature of duration and exposure to bonds.”
