They should represent 25 of the emissions of companies

Seven years after the creation of the euro, bonds denominated in European currency market continues to grow. On a background of strong demand, 1.676 billion in bonds were issued this year, in late November, with the currency European as the currency of reference, or 12 more than during the same period of last year, according to the Thomson Financial firm. The euro continues to be the first international before the dollar issue currency, even if the gap is reduced.

However, and this is one of the major innovations of 2006, the European States, which are by far the largest borrowers in euros, decreased borrowing for the first time for years. Brought by economic growth and the increase in the tax entries, the France, the Germany and the Italy have managed to reduce its budget deficit.

The companies, however, were more present in the market developing new more sophisticated segments. While the waltz of the mergers and acquisitions accelerated this year, they have had more use of bonds to finance their external growth operations, on a background of very low interest rates. "130 Billion euros of bonds should be issued by the companies this year, 35 have aims to finance an acquisition, which is a record since 1999," said Jean-François Mazaud, responsible for the origination for enterprises with Société Générale.

Bond say "high yield" or "junk bonds" were more numerous than usual. Fiat, Alstom, notice or Europcar have borrowed for this market, risky, but that meets a certain request investors, enticed by higher yields. They should represent 25 of the emissions of companies.

Growth of securitization

With the implementation of standards implementation des nouvelles des nouvelles avec la mise en oeuvre des nouvelles normes mise en oeuvre des nouvelles en oeuvre des nouvelles mise implement des nouvelles des nouvelles mise put the fiscal year 2005, the year also was marked by an attraction for all sophisticated instruments that allow to refinance Companies use more so-called hybrid obligations, which have been especially attractive since they are more seen as debt but partly as equity by rating agencies.

Above all, to find new sources of funding and optimize the structure of their debt, companies securitized more claims that they want more. This means that they leave these claims of their balance sheets and the risks that are related by issuing such bonds backed on these loans.

Very popular in the United States, the "asset backed securities" (ABS) and strongly developed in Europe this year. "The ABS market has grown substantially with the issuance of approximately 250 billion euros of these obligations this year, against 185 billion last year", said Arnaud Achour, responsible for the origination for Société Générale.

It must be said that beyond business banks, which were also more present in the bond market this year, much developed on sophisticated products of securitization of receivables, including the ABS.

"Faced with a greater than expected mortgage demand and a lower growth of deposits, financial institutions more turned to the bond market to refinance at a lower cost with the low level of interest rates", said Philippe Henry, Director of markets for debt in HSBC France.

They are have been especially encouraged that with the entry into force of the new prudential Bank (Basel 2) 1 January 2007 they wanted, they also improve their financial ratios. Hence their use growing obligations based on loans to SMEs or real estate, to transfer the financing and the risks to investors. In 2006, bond sitting on mortgages or "covered bonds" Wow (read below).

"Of"high-yield"to the"covered bonds", the Euro bond market grows in is significantly sophistiquant to the new needs of issuers and the competition between banks developing these products, which stimulates innovation," said Eugene Burghardt, responsible for markets in Deutsche Bank France. This increasing sophistication should continue to wear the market in the coming years, find Grégoire Varenne, head of debt and materials first to Société Générale. Banks and businesses are indeed more and more, according to him, to transfer the risks that they take in their financing at all levels.