(Recasts lead, adds detail)
By Kristina Cooke
LONDON, Feb 28 (Reuters) - Credit market volatility prompted Procter & Gamble Co to scrap the euro portion of its planned $4 billion bond sale on Wednesday, though a dollar-denominated issue went ahead.
As months of corporate bond spread tightening came to an abrupt end, the consumer products giant withdrew a minimum $2 billion of euro debt. Banks for Italian industrial groupSpA , also planning a bond sale, said they were monitoring the situation.
Still, some deals -- albeit much smaller in scale -- proceeded, with triple-B rated French financial holding company Wendel raising 400 million euros late on Tuesday and Baltic mobile phone operator pressing on with a planned high-yield issue.
Procter & Gamble on Wednesday re-launched the dollar portion of its sale, a $1.4 billion 30-year bond that paid 90 basis points over Treasuries, in line with expectations.
The corporate credit market has seen extreme volatility due to the global sell-off in equity markets this week. The iTraxx Crossover index, made up mostly of "junk"-rated credits and viewed as a proxy for risk appetite, has widened some 60 basis points, while the iTraxx Europe investment-grade index has widened some 3 basis points from its lows.
But Simon Surtees, co-head of fixed income at money manager Gartmore in London, said sharp moves in the Crossover index obscured the fact that cash bonds were comparatively unruffled.
"It's up there in bright lights and it does get noticed, but are people genuinely panicked at the moment in the credit markets? I would think not," Surtees told a Euromoney bond conference in London.
"I don't think you'll find that there have been a lot of sellers of cash bonds."
Procter & Gamble, which makes products such as Pantene and Pringles, was planning to sell a 10-year euro bond to yield 23 to 26 basis points over mid-swaps and a 20-year euro bond at 35 to 38 basis points over mid-swaps, as well as a 30-year dollar bond.
"Procter & Gamble is withdrawing the euro tranches based on unstable market conditions," an official at one of the banks managing the sale said.
Goldman Sachs, JP Morgan and Morgan Stanley are managing both the euro and dollar bonds, joined by Deutsche Bank on the euro tranches and Citigroup on the dollar bond.
However, in spite of the volatility seen on Tuesday, French financial holding company Wendel Investissement priced a 400 million euro 8 1/2 year bond.
The bond was priced to give a spread of 70 basis points over mid-swaps, wider than guidance of "high 60s" basis points over swaps.
"In order to print yesterday in adverse market conditions we had to convince the issuer it was worth reflecting that in the price. We printed the deal late in the afternoon, because we didn't want it to remain open as there was a risk," said Pierre Lebel, a syndicate official at Societe Generale, one of the lead managers on that deal.
"We felt we were in a position to do so because it was a small transaction with a target size of 400 million euros. We finished with a book that was 20 to 25 percent oversubscribed because we echoed the concerns of investors about the market."
Baltic mobile phone operator Bite is pressing ahead with plans to issue 300 million euros ($396.6 million) of high-yield bonds to fund its buyout by private equity firm Mid Europa Partners, a banker familiar with the deal said.
Pricing on that deal had been pencilled in for Friday, although it could slip to Monday given the volatility, the banker said. (Additional reporting by Quentin Webb and David Wigan)