Sterling corporate bonds reopen

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The sterling corporate bond market reopened on Tuesday after the summer shutdown amid further signs that investors are willing to buy riskier securities in an improving credit environment.

In the first corporate issue since June, Veolia Environnement, the French utility, raised £500m in a highly popular deal.

The company priced a 30-year fixed-rate bond at 150 basis points over gilts, at the tight end of guidance, as orders rose to £2bn from an investor community starved of sterling paper since a deal from Cattles, the subprime mortgage provider, four months ago. Barclays Capital, HSBC and Royal Bank of Scotland managed the sale.

The sterling market had been closed, mainly because of a limited pipeline, with few companies needing pounds for refinancing, though the credit crisis had also deterred some issuers.

Companies such as Veolia, which is rated at the lower end of investment grade, would have struggled to attract such strong demand before the US Federal Reserve’s half-point rate cut last month.

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