The effects of the sovereign debt crisis are still circumscribed

The storm which this year on European "peripheral" state borrowing little weighed on private sector debt fundraising operations. If volumes have decreased by 33, to 720 billion this year (based on data from Dealogic), first because the previous year was exceptional for the primary market in euros. In addition, after having been absent in 2009, banks resumed lending this year, which slightly reduced the remedy to the bond market.

The effects of the sovereign debt crisis are still circumscribed. At the time, first: in may, has been a freeze on the levees of private debt. In addition, year-end closure occurred earlier than usual, to early December, the Irish crisis. Another consequence: some "peripheral" States originating companies debt emissions have been postponed or cancelled. This is the case of Spanish Iberdrola, which nevertheless toured for investors to put hybrid securities (considered more risky than conventional titles). Finally, financial debt "device" has suffered, not only because of the strong interconnections between banks and States, but because the debate on restructuring resulting in losses for investors also. Debt of the banks of the Portugal emissions were almost divided by three to 2009, falling to a level lower than in 2008, black year.

If, overall, private debt has resisted, it is because the share of private issuers Greek, Irish and Portuguese is modest in the euro area total. Second, companies are outputs of the crisis with finance remediation for the most part. Their fundamental are sometimes even better noted by the market matching those of the State. Finally, bonds issued by companies and financial institutions offer more performance than the sovereign obligations, which sharpens the appetite of investors in an environment of low rates, so little remunerative.

Hybrid debt return

The placement of many noted non-financial companies were divided by two, 207 billion euros this year. It is this category of issuers which had been very offensive in 2009 ( 133 from 2008) and had taken the advance. In 2010, the companies that raised funds wanted to take advantage of attractive market conditions. The cost of theoretical average funding for non-financial corporations established to 3.88, according to Markit (Iboxx). If low cost, exchange of debt or repurchases-emissions operations multiplied, especially France. For example, France Telecom has bought three strains coming to maturity in 2012 and 2013, with coupon of 4.625, 4.375 and 7.25 for EUR 1 billion, and has raised 750 million euros of titles in 10 years at a rate of 3,875. These operations to extend the maturity of the debt, which was one of the major themes of 2010.

"Another significant event this year was the return of hybrid of business debt emissions as those of RWE or Suez Environment, Muriel Caton, RBS." Investors were somewhat appetite of these titles because they offered an average of 250 to 300 more classical senior obligations basis points. "According to her, the trend should continue in 2011, with stable volumes, about 7 to 10 billion euros.

In General, the specialists believe that next year, the companies debt fundraising will reach almost 2010 levels. The main risk for primary be held in the evolution of the sovereign debt crisis. The contagion effect may be stronger than this year, especially if the Spain is affected. Another risk, a little more distant, is refinancing: the deadlines to honour by businesses well and poorly rated (taking into account loans that could turn into bond) fly to 1,000 billion euros in 2012.