The first European benchmark corporate bond of the year priced yesterday, showing that the bond markets have roared back to life early this year amid concerns over competition from other issuers and continuing instability over European governments. That backdrop means we could see a very active first month across bonds, as issuers scramble for funding.

German auto giant Volkswagen printed a €1.25bn deal yesterday, pricing the four and a half year bond at mid-swaps - the basic funding rate based on interest rates - plus 60 basis points, meaning a combined coupon of 2.7%. To put that in context, the company's outstanding bonds maturing in 2015 priced at 51 basis points over swaps, meaning comparatively aggressive pricing taking into account the longer maturity and added cost of bringing a new issue in the current funding environment - also called the new issue premium.