Record Bond Sales Make Waves in Europe: Borrowers Capitalize on Low Spreads Ahead of 2025

Investing.com -- On Tuesday, a record amount of borrowing flocked to the European bond market to take advantage of spreads at their lowest in nearly three years. According to data compiled by Bloomberg, 28 issuers aim to raise at least €30.4 billion ($31.7 billion), with expectations for this figure to rise as the day progresses. This marks the highest number of borrowings in a single day in the last decade.

The European primary bond market began to pick up after a relatively quiet period during the New Year holiday and Epiphany celebrations. This surge in activity follows a record year for new issuances in 2024. Borrowers are attracted by low spreads, which reflect the compensation investors demand over benchmark rates.

Marco Baldini, head of global investment-grade syndication at Barclays Plc, attributed the high issuance levels to the timing of the holiday season. He also noted that cash-rich investors are ready to accommodate new issuances.

Many banks, including Barclays Plc, BPCE SA, Natwest Markets Plc, Nationwide, and Commerzbank AG, are offering new deals. Food and beverage giant Nestle SA aims to raise €1 billion from a seven-year offering and a rare 20-year issuance. Additionally, Renault's financing company is pursuing a three-year deal, while Enel is presenting a two-part hybrid bond.

Companies have moved quickly to enter the market early this year to avoid the earnings blackout periods that will begin later in the month.

In the government bond sector, Hungary, Slovenia, and Belgium have commenced sales. Chile has also joined this trend, aiming to raise funds through a euro-denominated social bond.

Looking ahead, more deals are anticipated. German airline Lufthansa and chemical producer Evonik Industries AG have already announced their plans for offerings in the coming days.