European real estate companies are closing in on a record year of bond issuance having already raised nearly double 2011’s total, highlighting the industry’s growing disenchantment with the bank funding market.
Property groups have raised €15.4bn so far this year, compared with €8.3bn in 2011, through a combination of corporate bonds, private placements and smaller denomination retail bonds, according to research provided for the Financial Times. If the trend continues, issuance will hit almost €20bn by the end of the year, a record annual total.
The depth of demand and low cost – the average coupon interest on the 134 bonds issued so far in 2012 is 4.74 per cent – suggest capital markets are pricing risks at less expensive levels than the continent’s banks in an era of historically low interest rates.