Companies sold record amounts of junk bonds globally last week in the latest sign of relentless demand for low-rated corporate debt this year.

Even companies in Europe where the junk bond market essentially had shut down just a few months ago are finding buyers.

Schaeffler, the private German precision engineering company, was among the recent issuers, debuting in the capital markets with the biggest euro junk bond in nearly six months as well as debt denominated in US dollars.

Junk bond issuance totalled a record $19.6bn last week, including a sizeable chunk of debt that European companies sold in the US, according to Dealogic, the data tracker.

“Lingering concerns about Europe and the strong US rally have pushed many issuers into the US high-yield market,” analysts at Barclays Capital said in a research note.

Markets on both sides of the Atlantic have rebounded as concerns about the global risk from Europe’s debt crisis have eased. The larger and more liquid US market has also benefited from a pledge by the Federal Reserve to keep interest rates near zero through to 2014, prompting income-seeking investors to hunt for assets with the highest yields.

US funds that buy junk bonds have taken in net cash of $9.4bn this year while similar European funds have had net inflows of $81m.

Schaeffler’s deal, for example, included debt in both euros and dollars – €1.2bn and $1.1bn – for a total of about €2bn. It was increased in size by €1bn to one of the largest transatlantic debuts ever for the junk bond market. The company will pay interest rates of between 7.75 per cent and 8.75 per cent on debt ranging from five to seven years.

The deal comes as European commercial banks, long the main providers of credit to low-rated companies, are retrenching as they deleverage ahead of higher capital requirements from Basel III rules.

Schaeffler’s deal is part of a larger refinancing of €8bn of debt that was related to its 2008 purchase of Continental AG. Some €7bn of debt was due in 2013.

The bond deal and related loans will stagger Schaeffler debt maturities. Some of Schaeffler’s main banks, including Commerzbank, UniCredit and Royal Bank of Scotland, reduced their lending to the company as JPMorgan, BNP Paribas, Deutsche Bank and HSBC filled the gap.

“The best possible way to address the capital structure issues resulting from the acquisition of Continental shares in 2009 was to open up to the capital markets,” Klaus Rosenfeld, chief financial officer of Schaeffler told the Financial Times.

Bankers expect other companies will follow. Kevin Foley, a banker at JPMorgan, said the shift from European companies being funded by commercial banks to the capital markets is “an undeniable trend”.

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