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Bond sales on both sides of the Atlantic have ground to a halt after Russia’s invasion of Ukraine, adding to the challenges funding markets already face as major central banks look to withdraw stimulus given sticky inflation.

With the exception of pre-scheduled government bond auctions, no bonds were sold in major European and U.S. debt markets on Thursday and Friday and no companies announced deals on Monday, according to Refinitiv IFR.

Some borrowers are waiting on the sidelines with deals announced before the invasion began on Thursday and others like U.S. nutrition company BellRing Distribution, German state North-Rhein Westphalia and French credit insurer Coface cancelled deals, according to IFR.

The shutdown meant global non-financial corporates raised a mere $14 billion from bond sales last week, down from $28 billion the previous week, according to Refinitiv data.

“Where escalation was an outlier risk, it has now become a reality,” said Shanawaz Bhimji, senior fixed income strategist at ABN AMRO.

“Obviously, this will put off quite some issuers’ investment plans as they scramble their heads on what this means for economic growth, leaving issuance in the doldrums.”

The invasion has unleashed a fresh wave of uncertainty on world markets, sending corporate bond yields surging.

European junk bonds have been worst hit. Yields rose 25 basis points (bps) last week and touched the highest since July 2020 at 4.21%.

The pending end to pandemic-era central bank stimulus meanwhile has already more than doubled investment-grade corporate bond yields in the euro zone this year and slowed debt sales.

In U.S. and European high-yield markets, only two companies have raised a mere $1.8 billion-equivalent over the last two weeks, according to IFR.

For companies watching the issuance market, “the thinking varies a little bit based on their exposure to Russia, their urgency to refinance upcoming maturities,” said a head of corporate debt syndicate in Europe.

Still, one positive sign was the public sector debt market reopening with the European Investment Bank marketing a deal and Germany and its guaranteed agribusiness agency Rentenbank both hiring banks for bond sales, according to lead managers.

While corporate bonds sold off again after a rally on Friday, the spread on the iTraxx Europe crossover CDS index was still more than 30 bps below the peak on Thursday. Analysts noted that risk premiums on corporate bonds have remained relatively contained.

A relatively stable session could see companies return to market, the syndicate head said.

“There are enough discussions ongoing that gives me comfort that issuers will do something if the market feels vaguely OK.”

“The big debate here is what kind of new issue premium you’re going to pay,” he added.

Marco Stoeckle, head of corporate credit research at Commerzbank, said that provided the European Central Bank doesn’t delay the end of its bond purchases, he still expects issuers will seek to front-load their funding in coming months to take advantage of the stimulus.

“I don’t know when we will see the first deal... but as soon as there is a green light, it won’t take too long for corporate issuers to come to the market and get ahead of the curve.”

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