ESM-EFSF

The European Stability Mechanism has added a new 12-month bill programme for the second quarter as it looks to manage its collateral requirements amid volatility in rates. ESM and the European Financial Stability Facility have also set out their issuance windows for benchmark deals in April to June.

‘Corona bonds’ have been talked up so much that the EU risks underwhelming the market by failing to act. It has become a question of political solidarity within the region, not simply one of debt management.

The Eurogroup made no progress towards creating a common EU debt instrument on Tuesday night, but member states will be able to fund their responses to the coronavirus crisis through a new credit line with the European Stability Mechanism.

Could EU member states finally come together to issue a common debt instrument? In this article, GlobalCapital takes a look at the key issues.

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.

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.

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.

Rating: Aa1/AA/AA

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.

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.

This week's funding scorecard looks at the progress of Europe's supranationals and agencies at the start of March.