The European Investment Bank won a huge reception from investors for its debut €STR-linked floating rate note (FRN) this week, ignoring concerns about a lack of demand amid negative rates in the euro market. While there is a lack of clarity about calculating €STR bonds’ fair value and on Euribor’s future, public sector borrowers are expected to embrace the risk-free euro rate.
On Wednesday, the EIB sold a €1bn October 2022 €STR-linked FRN with a coupon of 200bp over the compounded €STR rate, and a reoffer price of 103.82, to give a discount margin of 11bp over €STR. The book closed with more than €2bn of orders, including €200m of
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