A large bond issue is in prospect: according to WanSquare's information, the German tyre manufacturer Continental is to place bonds worth between 1 and 1.5 billion euros on the Frankfurt Stock Exchange tomorrow. The coupon could be of the order of 8 to 9%.

Stifled by more than 8 billion dollars of debt maturing in 2012, Continental's intention with this operation is to spread out its repayments. Last January, it increased its capital by 1.1 billion euros in order to partially refinance a debt of 3.5 billion euros maturing next August. Controlled by Schaeffler, which is itself very indebted, Continental is suffering from the 2 billion euros of depreciation costs that it has incurred in the last two years.

This operation is significant in the current climate of the bond market, which is exceptionally quiet.

After a great fanfare in the first quarter, the European market has contracted by 42% in the last three months, due to concerns over the sovereign debt of the eurozone. The high yield segment, to which Continental belongs, has particularly suffered from investors' risk aversion.

But things seem to be easing off in the last few days, and some companies have taken advantage of the window of opportunity before the summer to refinance. Last week, Europcar issued 7-year bonds worth 250 million euros, while Hertz issued 400 million euros at 5 years and Heidelberg Cement issued 650 million euros at 5 years. Continental's issue, which is considerably larger, will be revealing as to the appetite of investors before the summer break.