International bond market round-up

Continental AG

Continental AG, Europe’s second- largest auto parts supplier, will sell at least Euro 750 million of bonds in the region’s first junk issue in a month. Hannover, Germany-based Continental will pay less to issue the seven-year securities than it did to sell five-year bonds on

9 July, after relative yields on speculative-grade securities dropped by a tenth. The new notes will be priced to yield less than 8 percent compared with the 8.75 percent yield on Continental’s Euro 750 million of 2015 notes.

Hungary

Hungary failed to raise the planned amount of debt at an auction on Thursday as growing concern the central bank may raise interest rates dampened investor demand. The state debt management agency sold Euro

124 million of 12-month Treasury bills, Euro 53 million less than planned, at an average yield of 5.82 percent, up from 5.44 percent at a similar auction on 19 Aug.

Lloyds Banking Group Plc

Lloyds Banking Group Plc, the U.K.’s largest mortgage lender, sold its first senior unsecured bonds in euros since November, taking advantage of the lowest borrowing costs in four years. The Euro 1.25 billion of

2015 notes were priced to yield 200 basis points more than the benchmark mid-swap rate. That compares with a spread of 213 basis points, or a yield of 3.28 percent, that investors demand to hold similar-dated bank bonds.

Lloyds issued senior securities as the cost of borrowing holds close the lowest since January 2006, down from a record 8 percent in March 2009. Banks have issued Euro 352 billionof bonds in Europe this year, compared with Euro 606 billion in the same period in 2009.

Romania

Romania’s Finance Ministry rejected all bids at an auction on Thursday of five-year bonds, the central bank said on its website. Demand for the bonds was Euro 108 million and the ministry had offered to sell Euro 70 million of the bonds. The failure was the second time in a row the ministry failed to sell the five-year bonds.

Slovenia

Slovenia has scrapped plans to sell more benchmark bonds this year as the economy’s return to growth reduces the need to raise money on international markets, Finance Minister Franc Krizanic said. The government planned to borrow as much as Euro 4.39 billion abroad this year, compared with Euro 4 billion in 2009. It sold Euro 1.5 billion of 10-year bonds in January and Euro 1 billion of five-year securities in March. “We don’t plan any more bond sales this year since we have enough funds deposited at banks,” Krizanic said this week.

Telefonica

Telefonica SA, Europe’s second- largest phone company, plans to sell bonds in euros in the first public issue by a non-financial Spanish borrower in six months. The seven-year notes may yield about 150 basis points more than the benchmark swap rate. That compares with 114 basis points for European phone company debt. Telefonica’s new securities are the first in Euro from a Spanish company since Iberdrola SA, the country’s largest utility, raised Euro 500 million from 10-year note sale in March.

Data compiled by MPM Capital Investments Ltd of 81, B.Bontadini Street, B’Kara. MPM Capital Investments Ltd is licensed to conduct Investment Services Business by the Malta Financial Services Authority. You may contact MPM on info@mpmci.net or 21493250.

www.mpmci.net