Companies are accepting the reality that borrowing costs are likely to stay high for the foreseeable future.
Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. Previously, he was chief markets strategist for Haitong Securities in London.
“Resistance is futile” was the lesson the Borg delivered in Star Trek.
Photographer: Leon Nearl/AFP via Getty Images
With European bond yields at their highest level in a decade, you might expect corporate debt issuance would be slow to non-existent. Instead, new bond sales by companies actually exceeded those from financial and government-related borrowers in September for the first time this year. It suggests that corporate treasurers are accepting that higher interest rates are here to stay, and that there’s nothing to be gained from a delay in coming to market.
Nearly €43 billion ($45 billion) of new corporate bonds were minted last month, by 50 different issuers across 76 tranches. Consumer-related companies including Reckitt Benckiser Group Plc, Carlsberg Breweries AS, E.ON SE and BMW Finance NV were the most active, contributing more than half of the new deals.
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