Pricing for the first corporate bond deals of 2023 suggests it’s going to cost European companies a lot more to issue debt than it did a year ago. More than twice as much, in the case of Renault SA’s finance company.
(Bloomberg) — Pricing for the first corporate bond deals of 2023 suggests it’s going to cost European companies a lot more to issue debt than it did a year ago. More than twice as much, in the case of Renault SA’s finance company.
RCI Banque SA is offering euro-denominated notes on Tuesday with a spread that’s more than double what it paid a year ago, according to people familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. The notes, maturing in 3.5 years, are being marketed at around 190 basis points over mid-swaps. The company paid 70 basis points for a similar deal in the first week of 2022.
Japanese carmaker Toyota Motor Corp is also in the market with a two-part euro-denominated deal. Initial price discussions for the three-year tranche are at 60 to 65 basis points over mid-swaps, compared to the 23 basis points the company paid for a four-year deal about 15 months ago.
The deals are the first batch of corporate debt set to price in 2023, setting the tone for one of the busiest months for bond sales in Europe. While it is typical for issuers accessing debt markets for the first time in the new year to offer higher concessions to lure investors, marketing has started at far wider levels than in 2022, indicating the extra risk priced in even for high-grade corporates when compared to a year ago.
Tuesday’s deals represent a fresh start for one of the key sources of company funding after aggressive central bank rate hikes turned the corporate debt market upside down in 2022. Global bond markets staged a late-year rebound as investors started to bet that inflation was coming under control, with borrowing costs falling close to levels last seen in the summer.
Read more: Borrowers Make Fast Start to January’s Debt Sales Bonanza
RCI Banque and Toyota’s offerings are part of a rush to market at the start of the year: Sixteen issuers across all sectors have announced deals across 22 tranches so far, with a minimum issuance volume of €10.4 billion. It’s poised to be the busiest session for the region’s primary debt market since mid-November, data compiled by Bloomberg show.
–With assistance from Paul Cohen.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.
