European companies are selling the fewest bonds in six years as the sovereign crisis sidelines cash-rich treasurers increasingly wary of the region's banks.

Volkswagen AG, Europe's largest automaker, Italian power company Enel SpA and Renault SA led 80 billion euros ($107 billion) of bond sales this year, the smallest amount since 2005, according to data compiled by Bloomberg. Borrowers may cut sales further next year to a euro-era record low of 70 billion euros, Societe Generale SA estimates.

European companies sitting on 540 billion euros of cash reserves, the most in at least nine years, are shunning bond markets even with yields near the lowest levels since November 2010. Investors who view corporate bonds as a haven because they're less affected by the euro-region crisis are driving yields lower, while banks are being hurt because they're the biggest holders of government securities.

Continue Reading for Free

Register and gain access to:

  • Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
  • Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.