ESM-EFSF
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SSA borrowers are streaming into the euro market, flooding the early part of the week with deals in an effort to secure funding before a slew of central bank meetings towards the end of the week. -
Quantitative easing, perhaps the single most important factor affecting bond prices over the past three years, could be coming to a long awaited end this year. Members of the European Central Bank governing council seemed to hint as much this week, causing govvie spreads to gap wider, writes Lewis McLellan.
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A pair of supranationals hit opposite ends of the euro curve on Tuesday, keeping down their size ambitions in favour of tightening pricing.
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BondMarker voters scored three deals last week, including the European Financial Stability Facility’s last helping of funding for the second quarter and an arbitrage style trade by KfW. Read on to see how the deals were received.
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The European Financial Stability Facility attracted a heavily oversubscribed book for a deal on Tuesday and was able to tighten its pricing considerably, but onlooking bankers did not seem taken by the supranational’s strategy.
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The European Financial Stability Facility wrapped up its second quarter funding on Tuesday with a larger than planned tap of its May 2047 bonds.
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The European Financial Stability Facility has opted to add liquidity to the long end of its curve during its funding window this week, hiring banks on Monday to reopen one of its longest dated issues.
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KfW drew its largest ever benchmark book this week while visiting the seven year tenor, a part of the euro curve that has been red hot for issuers for several weeks and that SSA bankers still has plenty to offer borrowers next week. The European Financial Stability Facility (EFSF) is lining up a deal for next week, although bankers are suggesting it looks at the long end.
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KfW took home €5bn in the seven year part of the euro curve, which has been red hot for a few weeks, with bankers citing low second quarter supply as particularly supportive of conditions and suggesting there is plenty more interest for further trades in the tenor. The European Financial Stability Facility is lining up a deal for next week — although bankers are suggesting it looks at the long end.
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A paper by the parliamentary group of the CDU/CSU, the leading bloc in Germany’s government, has said that fund distribution from a proposed European Monetary Fund should be controlled by the eurozone’s national parliaments. Such a measure would all but nullify the point of creating the EMF — and be a dire signal for hopes of further eurozone integration.
