(March 2): Borrowers are putting bond deals on hold in Europe as conflict in the Middle East rocks global markets, sending credit-risk gauges higher.
There are no euro, pound sterling or dollar deals currently being marketed in the region’s publicly syndicated debt market on Monday (March 2). Borrowers that had been looking at selling bonds are opting not to proceed, according to people familiar with the matter, who asked not to be identified discussing details that were private.
“We are in a wait-and-see mode,” said Marco Baldini, Barclays’ global head of investment-grade syndicate. “All of the go/no-go calls for today have been cancelled given the weak backdrop,” he said, referring to the early morning calls that bankers hold with issuers looking to sell bonds.
Debt market participants had expected March to start with a healthy flow of sales, according to a Bloomberg News survey conducted on Thursday and Friday last week. At that time, all respondents to the survey had forecast sales of at least €25 billion, with some even predicting volumes of more than €50 billion for this week.
Things have changed rapidly since then, with war between the US and Iran breaking out over the weekend and hostilities subsequently escalating across the Middle East. Gauges of European firms’ credit risk surged the most since October in early-session trading, while global stocks tumbled and oil prices jumped. High-grade credit spreads in Asia widened about four basis points, according to traders, on track for the most in seven months, a Bloomberg index shows.
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If no bond deals are forthcoming today, it would mark the first Monday without a debt offering this year, according to data compiled by Bloomberg.
To be sure, debt markets are typically quick to bounce back from any setbacks and the predicted volume of deals for this week suggests there is a pipeline of offerings ready to come once markets stabilise.
In the local Swiss franc market, one deal is being offered. Mobimo Holding AG is tapping an existing sale of green notes.
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“My main concern is the expected pipeline of supply we had for this month,” said Andrea Seminara, chief executive of Redhedge Asset Management. “I would not wait too much; print a bit cheaper but print now. Leaving 10 basis points on the table is better than 300,” he said.
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