Danone secures billions in bonds amid war-driven market volatility

16:10

By: Dakir Madiha

Danone secures billions in bonds amid war-driven market volatility

Major blue-chip firms rushed to lock in funding during brief market lulls as the US-Iran conflict disrupts global bond markets and drives up borrowing costs. Danone led a wave of European bond issuances Wednesday with a three-tranche deal. It drew over 6.5 billion euros in orders for euro-denominated portions and more than 1.5 billion pounds for a 350 million pound tranche.

The French food group's strong demand highlighted how issuers seize any easing of tensions. Recent diplomatic pushes aim to end the Middle East war. Mondelez International also acted, tapping the Swiss franc bond market for the first time with tranches maturing in 2029, 2032, and 2036.

Corporate debt markets across Asia rebounded too. Credit default swap spreads fell at least 4 basis points after President Donald Trump signaled openness to Iran talks. Germany's KfW development bank noted the volatile environment has shortened issuance windows. Emitters now strike whenever conditions align, abandoning midweek norms.

US 10-year Treasury yields have climbed since the conflict began. Oil price spikes after the Strait of Hormuz closure fuel inflation fears. Charles Schwab analysts observed Treasuries failed as safe havens; investors focused on inflationary risks over flight to safety.

Bond market volatility soared. The VIX closed at 26.95 Tuesday; the MOVE index tracking interest rate volatility hit its highest in over a year. Both the Bank of England and ECB held rates steady last week amid energy-driven inflation pressures.

This scramble echoes early March when 21 billion euros in bonds sold in one European day after Trump hinted at war's end. US investment-grade issuance reached 484.9 billion dollars by late February, up 12.4% year-over-year. Corporate treasurers borrow now to dodge worse terms later.