By Laura Benitez

LONDON, Nov 14 (IFR) - US pharmaceuticals AbbVie and Mylan have set their sights on Europe's bond market to sell debut euro bonds, taking advantage of positive sentiment for the sector after last week's unexpected Donald Trump victory in the US election.

Bonds in that space were among the biggest gainers last Wednesday as investors looked to pick potential beneficiaries of the policies of a Trump presidency and his more lenient views on drugs pricing.

However, the two issuers will have to contend with a volatile market backdrop, where government bonds have brutally sold off as investors fear that monetary easing may come to an end.

After meeting investors last week, AbbVie is selling a triple-tranche euro deal today, expected to total around 3bn in size, while Mylan is planning its return to the market after withdrawing its potential debut euro in September.

TRICKY TIMING

These trades - and euro-denominated bond issuance in general - are expected to come at a price this week, due to increased European rates volatility. The 10-year German Bund yield rose to its highest level since January. It has jumped from 0.15% to 0.37% in the last week alone.

"It's a very tough market and the AbbVie deal is looking very cheap for investors right now," one banker said.

"The huge moves in rates are worrying investors and making them defensive," one banker said.

AbbVie started marketing a three-year tranche at 70bp area, a long seven-year at 110bp area and a 12-year at 135bp area, all over mid-swaps. This was revised to 55bp-70bp, 100bp area and 125bp-130bp, respectively.

Higher Bund yields and the approaching year-end are also forcing investors to reduce risk at the long end of the curve.

"We like the credit but the volatility in rates leaves us on the sidelines in the near term," said one UK based portfolio manager.

"There is a rush to get many of these deals done by year-end, and ahead of Thanksgiving, but [I'm] not sure there will be huge appetite from investors until the Bund curve stabilises."

Barclays, Bank of America Merrill Lynch, Deutsche Bank, JP Morgan are bookrunners on the deal, with Morgan Stanley also acting as global coordinator.

The deal follows European fixed income investor meetings that were held from November 9.

SECOND TIME LUCKY?

Mylan is also trying to cash in on the post-election pharmaceutical rally to return to the European market for a debut euro.

The US company met investors from September 7-9 for a potential benchmark multi-tranche debut offering, rumoured to be around 3bn in size.

It decided not to proceed with its euro bond plans after it came under intense scrutiny for sharply raising the price of its EpiPen allergy auto-injector.

The company has continued to court controversy with the US Senate Judiciary Committee urging federal antitrust regulators to launch a probe into whether it broke the law by preventing schools from purchasing competing allergy treatments .

"This could be a tough one, given DoJ investigation headlines regarding potential collusion in generic drug pricing," another investor said.

"It's very difficult to prejudge the outcome but our concern is this has the potential to threaten its investment-grade ratings."

The borrower has indicated its intention to sell a multi-tranche benchmark transaction, comprising a two-year FRN and four, eight and/or 12-year fixed-rate notes.

Rated Baa3/BBB-/BBB-, Mylan has mandated Deutsche Bank, Citigroup, ING and JP Morgan for the upcoming deal.

(Reporting By Laura Benitez; Editing by Philip Wright and Helene Durand)