Spanish waste mngt co. issues €150m 5yr PIK note @4.5%. Yes, only 4.5% for a Spanish junk (climate) bond! Does that mean the ECB strategy is working?

Spanish waste management company Befesa Medio Ambiente SA is the global leader in recycling steel dust into zinc and also the global leader in aluminium recycling. We count corporate bonds from companies like Befesa as part of our bonds and climate change universe when they come from companies 100% devoted to "circular economy" activities that lead to lower lifecycle energy and GHG usage (e.g. recycling aluminium uses a LOT less energy than making it).

Befesa yesterday announced it was offering for private placement what is more or less a €150 million ($200m) junk bond, guaranteed by its parent, private equity firm Triton Partners. It pays 4.5%.

According to Bloomberg, the average yield on junk-rated corporate bonds in euros is currently 4.5%. Yes, you read that right - even Spanish junk bonds are getting very low interest rates nowadays.

The offering is actually a "PIK (Payment In Kind)" "note". PIK notes (loans) don't provide for any cash flows or interest payments from borrower to lender until the end of the bond's life.