General Electric Issues $8.7 billion Euro Corporate Bond After French Election

By Tasos Vossos Features Dow Jones Newswires

General Electric Co. issued a EUR8 billion ($8.7 billion) bond on Wednesday, capitalizing on the release of pent-up demand after the French election.

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The deal is one of the largest in the euro corporate bond market's history. It follows a string of euro corporate bond issues on Tuesday, including deals from Kellogg Co. and Spanish oil company Repsol SA.

Over the past five weeks, companies had held back from selling bonds in Europe given political uncertainty spurred by the French election. Many firms had also already raised cash earlier this year ahead of a series of European elections in which anti-euro candidates were making ground in the polls. France's presidential election ended on Sunday with a win for mainstream candidate Emmanuel Macron.

"Risk appetite is there and it's a good opportunity for issuers to print bonds," says Thomas Neuhold, portfolio manager at Austria's Gutmann, who bid for one of the GE's four bond tranches.

Given the lack of issuance over the past few weeks, investors have cash they can spend on new deals.

Frazer Ross, a senior debt banker with Deutsche Bank AG, said the latest available figures showed there were EUR22 billion of orders for the General Electric bonds, with the highest level of demand coming for the longer-dated securities on offer, including a EUR2 billion tranche of 20-year debt.

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"The message is political risk in Europe is subsiding and markets are open. Even though the Fed is hiking and there's talk of ECB tapering...there is demand for long-dated bonds," said Mr. Ross, who is working on the deal. Mr. Ross said global asset managers as well as pension funds and insurance companies had placed orders for the securities.

"[Fund managers] have a lot of money available," said the head of syndicate at a large European bank, who declined to be named.

But the good conditions may not last, as central banks begin thinking about tapering or ending their massive bond-buying schemes.

The European Central Bank and Bank of England have also bought corporate bonds, which analysts said helped to prop up the market.

Analysts expect the ECB to start tapering its bond-buying program early next year and end its asset purchases within 2018. But an announcement on tapering, or at least hints of the central bank's intentions, could come as early as the ECB's June meeting.

The Bank of England completed its own GBP10 billion ($12.94 billion) corporate bond purchase scheme earlier in May.

Christopher Whittall contributed to this article.

Write to Tasos Vossos at Tasos.Vossos@wsj.com

(END) Dow Jones Newswires

May 10, 2017 10:36 ET (14:36 GMT)