(Bloomberg) -- Europe is set to pass the €100 billion ($110 billion) mark for September bond sales in record time as borrowers take advantage of lower yields and comparatively calm markets to load up on debt before the US presidential vote.
The threshold will be passed two weeks sooner than last year, according to data compiled by Bloomberg going back to 2014. Some €97.2 billion had been sold by Tuesday and at least another €6.6 billion is due to price on Wednesday.
While a busy primary market is nothing new for September, the prospect of violent price swings as the November elections approach is encouraging issuers to get their debt sales locked in early. Yields have fallen and the European Central Bank is expected to deliver a quarter-point interest rate cut on Thursday, its second in 2024.
“As rates have come down since late July, yield-focused issuers have an additional reason to issue,” said Matthias Reschke, JPMorgan Chase & Co.’s head of European investment-grade finance. “Investor appetite is meeting the supply with cash built up during the summer period and renewed optimism of accelerating rate cuts.”
Bond sales from Italy, the European Union and the UK have helped bump up volumes since the beginning of the month. In the case of Italy, the sovereign got a record amount of bids for its €8 billion 30-year note.
Italy Gets Record Demand for Bond Offering Ahead of ECB Meet
Non-financial corporates have already inked €18.5 billion with €4.6 billion more being sold on Wednesday. That comes after a record-breaking August when almost €30 billion was priced, the data shows.
Even the riskier companies are coming to market, with four deals in the UK’s embattled water sector, as well as a flood of hybrid bonds. AT1 debt sales hit a weekly record last week.
“Post quarterly results you get into the American election, which can bring some volatility and then you’re very close to the year end,” said Stephanie Besse, global head of DCM corporate origination at Natixis CIB. For some companies, the earnings calendar means they could have to wait until March before they can issue.
In the US, blue-chip companies are taking advantage of the drop in borrowing costs, with about $103 billion sold so far this month.
--With assistance from Hannah Benjamin-Cook.
©2024 Bloomberg L.P.
