Warren Buffett’s Berkshire Hathaway Inc. and Ferrari NV led companies with euro-denominated bond sales, as a revival in single-currency debt sales gathers steam.
Berkshire sold 2.75 billion euros ($3 billion) of notes maturing in four years, eight years and 12 years, according to data compiled by Bloomberg. The offer comes a day after Berkshire sold a company-record $9 billion of debt to help repay loans used in the acquisition of Precision Castparts Corp.
Ferrari and Petroleos Mexicanos also sold euro bonds as issuers flock back to the market because of a decline in borrowing costs caused by expectations for further European Central Bank easing. Highly rated companies have sold more than 38 billion euros of notes already this month, surpassing half of January’s 63 billion-euro total, according to data compiled by Bloomberg.
“New issuance has started to pick up, but the market environment remains quite volatile,” said Chris Bowie, a money manager at Twentyfour Asset Management in London, which oversees about 5.5 billion pounds ($7.8 billion).
Berkshire narrowed spreads in its sale. It sold 1 billion euros of four-year bonds to yield 60 basis points above benchmark rates, after initially marketing them to yield 85 basis points more, according to a person familiar with the matter who asked not to be identified because they’re not authorized to speak publicly. The premium on 1 billion euros of eight-year notes dropped to 95 basis points from an initial 120 basis points. Berkshire also sold 750 million euros of 12-year securities at 140 basis points, compared with an initial offer of 165 basis points, the person said.
Investors demand an average 114 basis points above benchmark rates to hold highly rated debt, according to Bank of America Merrill Lynch Index data.
Berkshire, based in Omaha, Nebraska, was able to tighten yields in Tuesday’s seven-part debt sale because of investor demand. The longest part was $2.5 billion of 3.125 percent of 10-year bonds yielding 1.3 percentage points more than similar-maturity Treasuries, according to Bloomberg data. That was down from an initial offer of 1.55 percentage points.
Ferrari, the supercar maker formerly part of Fiat Chrysler Automobiles NV, sold 500 million euros of unrated seven-year bonds at 140 basis points above benchmark rates, Bloomberg data show. Mexican oil company Pemex sold 2.25 billion euros of three-year and seven-year notes, according to the data.