Portugal, Ireland make big concessions

Having been forced to postpone its deal last week in the wake of massive spread widening of peripheral government debt, a modicum of stability has allowed Portugal to price a Eu4bn 10 year OT this week. Priced at mid-swaps plus 135bp, the tight end of 135bp-140bp guidance, the deal offered a premium of between 20bp and 30bp over its outstanding 2018 OT. Ireland, whose debt suffered the worst in last week’s spread widening, is also issuing this week, issuing a Eu3bn three year bond, which has price guidance of mid-swaps plus 170bp-180bp, a concession of some 40bp over outstandings. Read EuroWeek on Friday to see how the borrowers view these expensive capital raisings. Also this week, the European Investment Bank has taken the unusual route of funding through a floating rate note. The $2bn three year priced at three month Libor plus 30bp and is the supranational’s debut FRN in the global market.