London-listed Compass Group has announced plans to market new sterling and euro bonds, as the corporate credit market reacted to the UK’s shock election result with a big shrug of indifference.
The food services company will hold meetings with investors next week to gauge their demand for potential sterling and euro bonds with tenors between seven and 15-years. Compass, which is rated A3 by Moody’s and A by S&P, is looking to raise the money in part to fund a special dividend to shareholders.
The British company’s announcement of plans to issue bonds underscores how little the corporate debt markets have reacted to the Conservative party’s loss of a majority in the UK election.
Sterling corporate bond prices were little changed on Friday morning. Even the majority of junk bonds from highly leveraged UK companies were essentially unchanged, in stark contrast to last year’s Brexit vote that triggered a sharp sell-off in risky securities.
Broader European corporate credit was actually up on the day. The iTraxx Main, a closely-watched basket of mostly investment grade credit default swaps, tightened to 59 basis points – breaking through the 60 basis point barrier for the first time in 2017.
And the euro high-yield market looks set to see one of its largest deals of the year. Goldman Sachs announced to investors that it would market a €3bn-equivalent high-yield bond next week, which will be denominated in euros and Swedish krona.
While the US investment bank did not announce which company the bond is for, several market sources said it is widely expected to be a well-flagged deal backing the merger of Nordic debt collectors Intrum Justitia and Lindorff. Goldman Sachs is the lead underwriter of a €3.4bn bridge loan backing the deal.