Corporate bond sales fell to a minimum of three months in Europe this week

Corporate bond sales fell to a minimum of three months in Europe this week as the region's worsening debt crisis facing the emitters outside the largest increase in borrowing costs since May.

Sales fell 23 percent to 4.8 billion euros (6.6 billion U.S. dollars) from the previous week, the lowest since Aug. 15, according to data compiled by Bloomberg. ArcelorMittal, the world's largest steelmaker, and HSBC Holdings Plc led sales with each raising 1 billion euros (1.4 billion).

investor concerns that the most indebted countries in the euro region will have a rescue plan led to records of performance bonds in Ireland and Portugal. The evils sovereign debt burden on the corporate credit where yields on the investment-grade debt rose 10 basis points to 173 basis points above the benchmark German debt, according to Bank of America Merrill Lynch indexes.

"The weakness induced by the sovereign that has plagued the markets for two weeks added to the lower liquidity and left markets in a fragile state," wrote Juan Esteban Valencia, a credit strategist at Societe Generale SA in London, in a note to investors. "As expected, cash differentials have been increasing."

The leaders of the governments of the region surrounding the euro are struggling to convince investors remain viable amid burden of mounting debt. Group of 20 leaders in Seoul talks about the debt crisis of Ireland as the yield premium on the bonds of Ireland in relation to German bonds rose to a record yesterday.

Adjournment Doux

The market turmoil prompted Doux SA, Europe's largest producer of chicken, to postpone the sale of bonds in the first place, according to a person familiar with the transaction. The Chateaulin, France-based company planned to raise up to 400 million euros for seven years, high-yield notes.

ArcelorMittal cut its borrowing costs by almost half of its new notes for seven years, aided by near-record low yields on benchmark government debt. The Luxembourg-based steel maker sold 1 million of debt at a price of 4.742 percent, which issued the same amount of similar notes maturing in May 2009 to 9.5 percent, according to data compiled by Bloomberg.

Benchmark yields on government bonds are kept low by the attempts of political leaders "to stimulate growth. Ten-year German bund yield fell to 2.43 percent from 3.43 percent in early 2010. Security Government of reference in Europe reached a record low of 2.087 August 31, according to Bloomberg data.

HSBC, the largest bank in the United Kingdom, sold 1 million of securities maturing in 2017 with a yield of 78 basis points more than benchmark swap rate, according to Bloomberg data. Lender Banca SpA ICCRE also sold the notes, the issuance of € 400 000 000 of floating rate debt in two years.

Delta Lloyd NV, the Dutch unit of London-based insurer Aviva Plc, raised € 575,000,000 of bonds of seven years producing 190 basis points more than the swaps, according to Bloomberg data.