AIB postpones planned sale of 10-year covered bonds

AIB became the latest borrower to postpone a bond sale in Europe as investors said a surge in issuance allowed them to be more selective.

"Supply volumes have been very heavy recently, and this has made the market susceptible to a bout of indigestion," said Joseph Faith, a credit strategist at Citigroup Inc. in London. "The names that investors like will still have plenty of demand; other issuers are likely to find it harder."

AIB Mortgage Bank planned to sell 10-year covered bonds in euros, a person familiar with the matter said.

The Dublin-based lender said it will look into issuing the debt “in the near future.”

The postponed transactions come amid the busiest November for European bond sales since 2009, with companies issuing almost €93 billion of debt, according to data compiled by Bloomberg.

Record low yields attracted borrowers such as GlaxoSmithKline and Apple, which raised €2.8 billion from a debut sale of bonds in the currency earlier this month.

“The market tone in the last 24 hours has deteriorated, as evidenced by the postponement of a number of new issues in the financial institutions arena,” AIB said in a statement.

Average yields on investment-grade bonds in euros declined to a record 1.16 per cent earlier this month, according to Bank of America Merrill Lynch index data. That compares with 2.08 per cent at the start of the year, the data show.

Bloomberg