Draghi Smashes Corporate Yields to 1% Before a Bond Is Bought

Even before Mario Draghi starts his corporate-bond buying program on Wednesday, he’s pushed down borrowing costs in Europe toward unprecedented levels.

The average yield on investment-grade company notes in euros tumbled to 1.002 percent on Monday, according to Bank of America Merrill Lynch index data. That’s the lowest in more than a year and a smidgen away from dropping below 1 percent, something that’s happened in just one other period.

Companies benefiting from the lower borrowing costs are issuing bonds at an increasing clip. More than 50 billion euros ($57 billion) were sold in the single currency in May, the second-busiest month on record. Air Liquide SA, the investment-grade French industrial gas maker, issued 3 billion euros of bonds on Monday, with just one of five parts of the deal priced with a coupon above 1 percent, according to data compiled by Bloomberg.


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam