BP BP Plc

By Christopher Whittall 

LONDON--Two large European companies are set to be paid by investors to borrow, taking advantage of ultralow interest rates spurred by the European Central Bank's corporate bond-buying program.

German multinational Henkel AG and French drugmaker Sanofi SA are set to pay a yield of minus 0.05% on new issues of short-dated bonds on Tuesday, according to deal notices released to investors. The fund raising is another sign of how unprecedented monetary policy has turned conventional investment theory on its head.

While several developed world countries are able to sell debt with negative yields, it is still rare for companies. Only British oil giant BP PLC, German car-marker BMW AG and Germany's state rail operator Deutsche Bahn AG have issued public, euro-denominated bonds at negative yields to date, according to Dealogic.

Yields on corporate debt have plunged in recent months as investors have pushed up prices in the scramble for returns. Roughly EUR717 billion of eurozone investment-grade bonds traded at a negative yield as of the end of August, or over 30% of the entire market, according to data provider Tradeweb.

The ECB had bought over EUR20 billion of corporate bonds as of Sep. 2, after launching its program in early June, with most of its purchases coming in secondary markets, where investors buy and sell already-issued bonds.

The central bank meets on Thursday and will decide if it should expand its current bond-buying program.

The new debt sales mark a burst of issuance following the traditional summer lull in local capital markets.

Commodities giant Glencore PLC is also raising cash on Tuesday in one of its first forays into capital markets since its shares and bonds were sold off last fall amid concerns over debt levels and falling commodity prices. The company raised 250 million Swiss francs in April.

Scott Patterson contributed to this article.

Write to Christopher Whittall at christopher.whittall@wsj.com

(END) Dow Jones Newswires

September 06, 2016 09:01 ET (13:01 GMT)

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