ESM-EFSF

Read this week's funding scorecard to see which European supranationals and agencies are nearly done for the year, and which have room for another benchmark.

The European Financial Stability Facility is set to bring a benchmark next week, having sent out a request for proposals on Wednesday. It has a wide range of options open to it, said SSA bankers, but it will look to avoid cannibalising demand for the European Stability Mechanism’s next — and second ever — deal which will come later this year.

The European Stability Mechanism made a benchmark debut on Tuesday with a five year that came at the upper end of size expectations. Pricing offered a decent premium over where the borrower is expected to trade in relation to its peers, helping to produce a deal that was more than twice subscribed in just 45 minutes. KfW is set to follow with a benchmark in the same maturity.

A pair of issuers could bring euro syndications this week if the European Stability Mechanism has a success on its hands with a debut benchmark slated for Tuesday. Europe’s permanent bail-out mechanism mandated three banks on Monday afternoon for a deal in the belly of the curve.

PART 2: The European Stability Mechanism’s debut benchmark — slated for next week — will not be affected by a US government shutdown or political squabbles in peripheral European countries, says Christophe Frankel, deputy managing director and chief financial officer of the ESM, in an interview with SSA Markets.

PART 1. The European Stability Mechanism, Europe’s permanent bail-out borrower, is set to launch its first benchmark next week. As final preparations get under way, Christophe Frankel, deputy managing director and chief financial officer of the ESM, speaks to SSA Markets about the supranational’s issuance plans.

The European Stability Mechanism sent out a request for proposals on Wednesday morning ahead of an expected debut deal next week. The issuer has not expressed a preference for a particular maturity, though most syndicate officials are expecting it to take the safest route and sell a five year bond.

The euros market for SSAs this week could have a distinctly sub-sovereign flavour. Région Rhône-Alpes has hired two banks to run its inaugural bond issue on EMTN documentation. The deal, a dual tranche effort, will be its first debt issue in over a year and only its third ever, SSA Markets understands.

After a rash of post-Fed issuance, it is clear that investors — at least this week — are a bunch not to be taken for granted. The European Stability Mechanism (ESM), might then well consider a five year deal its best option with which to inaugurate its debt issuance programme. But it needn’t and shouldn’t be so timid.

Plenty of SSA issuers took a big bite out of their funding targets in the short window of issuance between the end of the summer and this week's FOMC meeting. Here we provide updated figures on selected European supranationals and agencies.

There may have been the odd stinker of a deal this year but it is hard to fault SSA borrowers as a group. They went after the money this year with aggression, front-loading programmes and bringing some spectacular deals. Some market watchers were looking forward to the autumn issuance season being something of a repeat of the first three months of the year, but it does not look like that will happen. And that is a good thing.

The European Financial Stability Facility priced a September 2034 note on Wednesday afternoon. The issuer was able to offer a yield over 3%, which produced demand strong enough to allow the leads to print a larger than targeted deal well inside initial price thoughts.