Euro denominated bonds of US car makers General Motors and Ford traded higher in value on Friday, albeit in thin volumes, with traders looking forward to September US auto sales data later in the day.
"Both GM and Ford are tightening ahead of auto sales, but the market has been quiet all day," said a bond trader in London.
General Motors' 8.375 percent euro bond due in July 2033 was 2 basis points tighter at 272 basis points over government debt.
Ford's 5.75 percent euro bond due in January 2009 was one basis point tighter at 117 basis points more than government bonds.
Both carmakers launched new US sales incentives on Friday to try to clear inventories of unsold vehicles. GM, the world's largest auto-maker, said it would offer cash rebates of up to $6,000 on most of its 2004 sports utility vehicles and up to $2,500 on many of its 2005 pickups.
Ford raised cash rebates on some of its 2005 model-year vehicles by between $500 to $1,000 for a total of up to $2,000, but the new incentives are only scheduled to run through Monday.
"Telcos are following autos higher, though client flows are so light we are basically being driven by moves in stocks," said one trader in London.
France Telecom's 8.125 percent note due in 2033 was trading two to three basis points tighter at 1411 GMT at 105 basis points over government bonds, he said.
The FTSE Euro Corporate Bond Index showed investment-grade corporate bonds in euros yielding on average 46 basis points more than similarly dated government bonds at 1423 GMT, unchanged on the day.
In the primary market, Dutch retail group Vendex KBB NV sold a 275 million euro fixed-rate high-yield bond on Friday, a banker familiar with the sale said.
The 10-year bond was priced at par to yield 7.875 percent, the banker said, at the low end of the range of 7.875 to 8.0 percent released on Thursday.
The deal is part of a financing package backing the company's acquisition by US private equity firms Kohlberg Kravis Roberts & Co L.P. and Dutch firm Alpinvest Partners in July. UK private equity firms Permira and Cinven then took large stakes in the retailer, banking sources close to the matter said early in September.
Citigroup and ING were lead managers.
In the asset-backed market, Spain's Banco Pastor plans to launch a benchmark size bond backed by loans to small and medium-sized enterprises, lead managers Banco Pastor, BNP Paribas and DrKW said.
The transaction, a collateralised loan obligation, will be launched in the near future, subject to approval from securities regulator CNMV and market conditions.
Also from Spain, BBVA, the country's second largest bank by assets, plans to sell a 1.0 billion euro bond backed by auto loans in mid-October.
BBVA and J.P. Morgan are lead managing the bond sale via special purpose vehicle BBVA Autos 1 F.T.A. The deal will offer three tranches of investment-grade notes.