Traders who deal in the bond debt of companies with significant interests in Ireland, including Hammerson, the owner of the country's largest shopping centres, and US property firm Kennedy Wilson, which owns offices and apartments, will see better days after a disastrous Covid-hit year.
It wasn’t so long ago that property companies and airlines were asking for emergency support and precautionary bank loans. Now investors are desperate to lend them money.
Bonds of EasyJet property manager Hammerson - which owns huge swathes of Irish retail from Dundrum Town Centre, the Ilac, Kildare Village, and Swords Pavilion - are among the best performers in Europe this year. Investment-grade companies in the two sectors have sold €18.5bn of debt, the fastest pace of year-to-date issuance since at least 2010.
But the upsurge is driven by bets that vaccine rollouts in the UK and US will allow a return to normal life by the summer, even as much of the rest of Europe suffers under a third wave of the pandemic. Notes of the virus-battered companies also offer good value after central bank bond-buying pushed down corporate yields.
“Fundamentally there is a very good reason investors are getting behind these stories,” said Andreas Michalitsianos, a portfolio manager at JP Morgan Asset Management.
Mr Michalitsianos is looking to buy up laggards with the hope that they will keep closing the gap with the broader market.
Yields on EasyJet’s 2025 notes are more than 100 basis points higher than the index.
Bonds of real estate firm Kennedy-Wilson and bus operator First Group also trade at a premium despite a rally this year.
Meanwhile, one of Europe’s busiest airports is hitting the bond market to shore up its finances in the face of a second tourist season lost to the coronavirus pandemic.
London’s Gatwick Airport is marketing £400m (€468m) of junk-rated debt with a five-year maturity. But with British holiday makers still forbidden from traveling, it’s offering a hefty premium to lure sceptical investors - a yield between 4.75% and 5% which is more than double the average for European bonds with a similar credit rating.
Air travel has been one of the hardest-hit sectors of the coronavirus pandemic and 2020 saw multiple bailouts of beleaguered carriers.
And with much of Europe in the grip of a third wave of infections, the industry’s troubles are not over yet.
Gatwick’s passenger numbers will this year only rebound to around 40% of 2019 levels, Standard & Poor’s Global Ratings said in a note on Monday.
But while there’s little prospect of respite for the travel industry, Gatwick is selling into a booming junk bond market. High-yield debt sales are running at the fastest pace on record this year as investors scour for returns in a world of rock-bottom interest rates.