ESM-EFSF
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Eurozone government bond yields jumped higher early on Wednesday morning, unmoved by reports of a potential breakthrough for the issuance of common EU debt instruments. The European Central Bank is suspected to have stepped in to try and control the situation, with spreads to Bunds having moved to their widest points for a year or more. -
Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, March 16. The source for secondary trading levels is ICE Data Services.
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Market participants are debating whether the EU is responding quickly and strongly enough in the coronavirus crisis, after the bloc put off the question of how to involve the European Stability Mechanism on Monday evening.
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The European Stability Mechanism could guarantee loans across the eurozone and as a result significantly increase its annual funding programme in response to the Covid-19 pandemic, according to analysts at Rabobank.
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The public sector bond market pipeline is likely to remain sparsely populated as coronavirus pandemic volatility engulfs markets. But SSAs are happy to sit on the sidelines and wait for better market conditions.
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The European Financial Stability Facility was made to pay a bigger new issue premium than usual as it brought a cautiously executed tap to market, concluding its funding needs for the first quarter on Tuesday.
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This week's funding scorecard looks at the progress of Europe's supranationals and agencies at the start of March.
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Market participants will be keeping a close eye on how a deal from the European Financial Stability Facility (EFSF) will proceed next week, as it could well re-open the euro supranational and agency bond market after issuers shied away from doing deals this week, amid volatile market conditions and an improved cross-currency basis swap for euro funders to issue in dollars.
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SSA bankers have urged the European Financial Stability Facility to head to the short end of the euro curve next week to complete its funding needs for the first quarter.
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Trading levels given are bid-side spreads versus mid-swaps and/or an underlying benchmark and bid-yields from the close of business on Monday, March 2. The source for secondary trading levels is ICE Data Services.
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