Euro bond offerings gather pace

Mainland companies looking to bulk up their war chests for overseas acquisitions have Mario Draghi to thank for a weaker euro that broadens their fundraising options.

When the European Central Bank chief last month announced a €60 billion-a-month (HK$520 billion) bond-buying programme, finance chiefs at mainland companies were quick to size up the opportunities from the region's unprecedented stimulus.

State Grid Corp of China last month raised US$1.15 billion in its first euro bond offering - within days of Draghi's January 22 announcement - amid ambitious plans for 400 billion yuan (HK$495 billion) a year in acquisitions over the next five years.

With the ECB's long-anticipated quantitative easing response to Europe's economic malaise, the credit market has shifted into bullish territory.

"There's a lot of buying interest in credit markets right now," said Jeroen van den Broek, head of developed markets credit strategy at ING Bank.

State Grid and three other mainland state companies have raised almost US$3 billion in four euro-denominated debt issues this year. The brisk pace puts the year-to-date total in striking distance of the US$3.32 billion raised in six deals last year, according to data provider Dealogic. By UBS's measure, euro debt offerings from Chinese firms tripled to €5.35 billion in 2014 and will top that mark this year, according to Patrick Liu, the bank's co-head of Asian debt capital markets.

With most European sovereign bonds paying virtually no interest - and German government bonds of up to six-year maturities trading below zero - investors are hunting for yield. Mainland issuers of euro-denominated debt, with yields upwards of 2 per cent for long-term bonds, are a welcome alternative.

Mainland firms' enthusiasm for euro issuance is also driven by expectations of further declines in the value of the euro.