Leads Barclays, Crédit Agricole and Société Générale priced a fixed size €2.25bn November 2019 for EFSF at 13bp through mid-swaps, at the tight end of guidance of minus 12bp area. Books were over €3.6bn.
The pricing equated to a new issue premium of 4bp, according to a head of SSA syndicate away from the deal. That, coupled with the strong book, was a testament to the calming of the euro market after a turbulent few weeks when Bund yields soared from all time lows to yearly highs, he added.
“There’s a much more stable market backdrop and you can see that with how well the euro trades have gone this week,” said the syndicate head.
“The new issue premium looks decent. It’s a sensible trade at a sensible maturity, was well priced and at that tenor should appeal to the broadest investor base.”
But despite the less volatile market, the EFSF had still played it safe with its choice of tenor, according to a head of SSA syndicate on the deal.
“Most banks showed more or less the same maturity, between four to five years,” he said. “It’s obvious that duration is not the flavour of the month, since there is a lot of volatility and spreads are still not that attractive for some investors.”
The euro market for SSAs had been all but dead in May, with just one benchmark — also from the EFSF, a dual tranche tap — and a handful of smaller trades.
Excluding sovereign auctions, total SSA euro issuance in May — before Wednesday — was just €5.8bn from 15 deals, the lowest volume and number of deals for the month since €4.8bn from 11 deals in May 2000, according to Dealogic. Ignoring the typically quiet December months, it had also been the worst month for euro SSA deals since August 2009’s €4.4bn of trades.
Wednesday’s bond completes the EFSF’s €8bn funding programme for the second quarter.
