SFEF stars as others suffer under wider spreads

The successful execution of Eu12.25bn of agency supply this week demonstrated the liquidity available in the euro market but spreads for many issuers are still widening. While the prices paid by this week’s issuers look expensive, bankers believe they will represent good value if, as expected, levels widen further in the New Year. With the exception of Société de Financement de l’Economie Française – SFEF – which issued a stunningly successful Eu6bn two year at mid-swaps plus 4bp, everyone else has had to pay vastly more than they have been accustomed to. OKB priced a five year at plus 47bp, ICO a three year at plus 28bp and BNG, highlighting how expensive it is for issuers without a sovereign guarantee, is in the market with a long five year at plus 65bp. Meanwhile the European Community’s inaugural euro benchmark — a Eu2bn three year — was priced at plus 15bp against initial guidance of plus 20bp area.