Europe's sleepy market for new corporate-bond issues is still open as long as the returns are high enough to entice investors in.
A person with knowledge of the matter said that Volvo Treasury pulled in more than 3 billion euros of bids for a 500 million euro note. At a time when sales of corporate debt in Europe are plunging and markets are recovering from the steep bond selloffs, Volvo was able to slash the spread offered to buyers.
The bonds will have a spread of 53 basis points above mid swaps, well below the opening target of 85 basis points. The revised pricing is close to the outstanding debt curve of Volvo Treasury.
A test of a market where European businesses have been hesitant to borrow, with rising interest rates from the world's central banks and surging inflation stoking concerns about a steep drop in economic growth is provided by the deal. Sales by non-financial corporations are down 40% from a year ago, which has resulted in one of the slowest markets for new bond issues in Europe in years.
After a global rally pushed a gauge of corporate default risk to the lowest in more than two months, the Volvo sale is the first from a European firm.
When contacted by phone, a Volvo Treasury spokesman was unavailable.
The sale is expected to price later in the day. This is the third time this year that the borrower has entered the European publicly syndicated debt market. Since it was issued, the note has tightened around 20 basis points.
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