By Carol Dean The European primary bond market saw limited deal flow Thursday with issuers coming from opposite ends of the rating spectrum as the cost of insuring European corporate debt against default pushed tighter on positive earnings results. Paints and coatings company Akzo Nobel NV (AKZA.AE) said its second quarter revenue was up due to price increases while volumes were down. Akzo Nobel's five-year credit default tightened 9 basis points on the news to 144 basis points to Wednesday's close according to data provider Markit. Electrolux AB (ELUX-B.SK), Novartis AG (NOVN.VX) and Alstom SA (ALO.FR) were among the other companies posting better than expected results boosting market sentiment and pushing corporate secondary indexes lower. Swedish home-appliance maker Electrolux continued its resurgence with a forecast-beating rise in profit, driven by price increases in the crucial North American market. Novartis said 2Q profit has improved slightly, adding that growth in newly launched drugs more than offset weaker sales of its best-selling product Diovan, which has been seeing pressure from generics. And French power engineering and train company Alstom said Thursday that revenues over the April-June period, the first quarter of its fiscal year, rose 6% year-on-year and new orders were boosted by demand for the company's turbines and trains in emerging markets. Against this backdrop, sub investment-grade Irish packaging company Ardagh group is pushing ahead with plans to tap two of its existing high yield bonds for an additional amount of $920 million equivalent. Ardagh, through Ardagh Packaging Finance, will increase its euro- and dollar-denominated 7.375% bond maturing October 2017 for a $700 million equivalent, and its dollar-denominated 9.125% bond maturing in October 2020 for $220 million. Ardagh has set a yield on its dollar portion of the 2017 bond at 6% to 6.25% and on the euro 2017 tranche a yield of 6.25% to 6.50%. A yield of 8.25% to 8.50% has been set on the $200 million 2020 tap. The proceeds will finance the acquisition of Anchor Glass, the third-largest glass container manufacturer in the U.S. Triple A-rated European Investment Bank, or EIB has set pricing on its dollar-denominated, benchmark-sized, five-year bond in the area of 40 basis points over midswaps. Meanwhile, the gap between the heroes and villains of the euro-zone bond-market drama became clearer Thursday as Spain was forced to pay sharply higher borrowing costs at a short-term bond auction while French yields fell. Spain's higher yields and tepid demand from investors reflect nagging concerns about the execution of its banking bailout and the finances of its autonomous regions. At 1140 GMT, the iTraxx Europe index, which comprises 125 high-grade borrowers, 25 of which are banks and insurers, was at 160/161 basis points, three basis points tighter than on Wednesday, according to data-provider Markit. The Crossover index of 40 mostly sub-investment-grade European corporate borrowers was 13 basis points tighter at 637/640.50 basis points. (Sarka Halas and Serena Ruffoni contributed to this article) Write to Carol Dean at carol.dean@dowjones.com Subscribe to WSJ: http://online.wsj.com?mod=djnwires
