Volkswagen comeback pushes Europe bond sales past trillion euros


LONDONVolkswagen AG’s return from debt market exile following its 2015 diesel emissions scandal has helped propel European bond sales past €1 trillion (RM5.03 trillion) one month earlier than in 2016.

The German carmaker has issued €16 billion of securities in European currencies this year, making it the most prolific corporate issuer of notes in a market running at its fastest pace on record, according to data compiled by Bloomberg. US companies AT&T Inc and General Electric Co are Europe’s next biggest corporate borrowers, selling a combined €16 billion.

European borrowing costs are close to record lows after years of near-zero interest rates and central bank asset purchases created a market that favours issuers. The prospect of the European Central Bank (ECB) winding down stimulus has only spurred borrowers to issue faster in case it becomes more expensive, according to Peter Charles, head of Citigroup Inc’s European debt capital markets syndicate.

Companies “have been encouraged to issue now by the combination of current low rates, the ability to achieve long duration in some cases, as well as a concern that as the ECB reduces its asset purchases further, markets may become more volatile,” he said.

Volkswagen’s first deal of the year was an €8 billion offering in March that ranks alongside General Electric Co’s similar-sized offering two months later as Europe’s largest corporate bonds of 2017. — Bloomberg