By Katy Burne
Foreign borrowers, known as "yankee" issuers, are flocking back
to the U.S. debt market, taking advantage of an opportunity to
diversify their funding while investors are in a receptive
mood.
Investment-grade banks from Europe and Asia in particular have
sold $24.2 billion of bonds in the U.S. already this year, nearly
twice the amount to this point in 2012, according to data provider
Dealogic.
In the market this week were BBVA Banco Continental SA, a
Peruvian unit of Spain's Banco Bilbao Vizcaya Argentaria SA
(BBVACL.SN, BBVA), with a $300 million offering, Colombia's Banco
Davivienda SA (PFDAVVNDA.BO) for its first U.S. deal, sized at $500
million, and South Korea's Shinhan Bank, part of Shinhan Financial
Group Co. (055550.SE, SHG), for $350 million.
Ryan Preclaw, a credit strategist at Barclays, said companies
have been bringing forward their borrowing plans while U.S.
investors are open to new deals, and in case any unwinding of
monetary easing by central bankers prompts interest rates to rise
sooner than expected.
"Companies are always concerned that if they wait too long, they
will miss the window," he said.
Other yankee banks tapping the U.S. market this month included
Commonwealth Bank of Australia (CBA.AU, CBAUY), which brought a
two-year deal on Jan. 18 at 0.28 percentage point over the
three-month London interbank offered rate, a benchmark. That was
0.42 point lower than what the bank paid this time last year for
shorter-term debt of the same amount.
Sumitomo Mitsui Banking Corp., a unit of Sumitomo Mitsui
Financial Group (8316.TO, SMFG), was able to better its 2012 rates
when, on Jan. 10, it sold three-, five- and 10-year debt at 0.9%,
1.5% and 3%, respectively. Those were below its rates for debt of
the same length in July 2012 of 1.35%, 1.8% and 3.2%.
Helping the borrowers is the combination of investors willing to
lend and all-in rates remaining low for now.
European banks alone have issued $8.8 billion in the U.S.
year-to-date, three times the amount in the comparable span of
2012. Yields on debt in Europe's risky peripheral nations have
improved since European Central Bank president Mario Draghi pledged
to do "whatever it takes" to calm investor sentiment about the euro
zone.
"There is a demand for this issuance as you have seen risks
being reduced and some asset stabilization in Europe," said
Jonathan Duensing, head of corporate credit at Smith Breeden
Associates. Many portfolio managers looked to remove or not add to
European exposures over the past two years, he added, but now "have
begun to embrace those opportunities" as they hunt for yield.
The European bank issuance, however, parallels a rush of supply
from U.S. banks issuing debt following quarterly earnings this
month. J.P. Morgan Chase & Co. (JPM) sold $6.4 billion of new
bonds on Jan. 17, Goldman Sachs Group Inc. (GS)$6 billion of bonds
on Jan. 16 and Bank of America Corp. (BAC) $6 billion on Jan.
8.
Away from banks, foreign companies parading U.S. dollar deals
this week included Petroleos Mexicanos, or Pemex, which was out
with a $2 billion offering Wednesday, Electricite de France SA
(EDF.FR), which brought a $5.3 billion hybrid bond combining equity
and debt-like characteristics, and Qtel International Finance Ltd,
a unit of Qatar Telecom QSC (QTEL.DO). Those came on the heels of
earlier deals this month from Thai Oil PCL (TOP.TH, TOIPY),
Anheuser-Busch InBev SA (ABI.BT, BUD), and Total SA (FP.FR,
TOT).
Write to Katy Burne at katy.burne@dowjones.com