Volkswagen AG pulled in bumper investor orders in the first test of sentiment for Europe’s corporate bond market after recent turmoil in the banking sector.
(Bloomberg) — Volkswagen AG pulled in bumper investor orders in the first test of sentiment for Europe’s corporate bond market after recent turmoil in the banking sector.
The €1.75 billion ($1.9 billion) euro-denominated green bond offering from Volkswagen International Finance NV, attracted over €6.3 billion of investor orders, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it.
Volkswagen is the first non-financial corporate bond offering in the region since Credit Suisse Group AG’s rescue deal, according to data compiled by Bloomberg. Excluding deals that were already in the marketing stage, it’s also the first new corporate bond in Europe since the demise of Silicon Valley Bank nearly two weeks ago.
Seen as a safe issuer that’s regularly in the market, and the fact it is a green bond providing an extra layer of demand, the German car maker saw spreads on the bond due in three years tightening by 30 basis points and is set to pay a 17.5 basis point new issue concession, while the six year tightened 25 basis points and paying up 31.4 basis points, according to analysis using Bloomberg’s NIA function.
Bond issuance in Europe has stalled amid the market turbulence of recent weeks — a big change from the record pace of deals at the start of the year. Excluding this deal, only around €3.2 billion of new debt has been sold since March 10, and almost two-thirds of that has come from offerings by German states and development bank Kreditanstalt fuer Wiederaufbau — considered to be some of the safest issuers around.
Asked about the transaction, a VW spokesperson said it was part of the company’s refinancing effort as a frequent issuer, adding that the auto maker’s maturity schedule is “well known.”
–With assistance from Monica Raymunt and Paul Cohen.
(Updates with pricing details and Volkswagen spokesperson comments.)
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