ESM-EFSF

The European Financial Stability Facility (EFSF) priced a heavily oversubscribed five year on Wednesday to leave only €4bn left to raise this quarter and to leave the five year point clear for sister borrower, the European Stabilisation Mechanism’s (ESM), inaugural deal, which is expected to come this autumn.

The European Financial Stability Facility hired banks on Tuesday to run a five year syndication, leading bankers away from the deal to expect another jumbo print.

The European Financial Stability Facility (EFSF) is busy considering banks’ ideas on what to do in its next issuance window next week. With the European Stability Mechanism (ESM) set to begin benchmark issuance later this year and German federal elections, which could throw the eurozone debt crisis back into the forefront of investors’ minds, the issuer should forget about extending maturities and aim to pick up as much cash as possible.

Following an unexpectedly heavy week of issuance from European supranationals and agencies, here are the updated funding scores for selected borrowers in the category.

The EFSF raced through a €5bn seven year deal on Wednesday, encountering no resistance arising from Standard & Poor’s downgrade of Italy, one of its guarantors. The deal means the EFSF has raised 38% of its €13bn funding requirement for the quarter in its first deal of the period.

The European Financial Stability Facility mandated three banks for a seven year issue on Tuesday afternoon. The initial price thoughts led bankers away from the deal to suspect the supranational was going for a large deal and could get €5bn away.

Kingdom of Spain astonished SSA market participants on Monday afternoon, when it hired six banks to run a 15 year euro syndication, less than a week after fellow peripheral sovereign Portugal’s bond yields shot north of 8% on fears of a government collapse. The deal came on the same day as Bank Nederlandse Gemeenten (BNG) announced a 10 year deal with bankers also expecting a deal from the EFSF.

If there’s one thing people in markets cannot stand, it is uncertainty. But that is exactly where we stand with Portugal. The political, economic and capital market future of the country is teetering between recovery and disaster. But in chaos lies opportunity, we are often told. Now is the Troika’s opportunity to correct the errors it made in Greece. It had better take its chance.

Three borrowers are all contenders for summer benchmarks despite the volatility generated in the Portuguese government bond market this week following the resignation of two government ministers. The prospect of continuing supply after a volatile few weeks will come as encouraging news to market participants who in previous years have seen bad news on one peripheral eurozone sovereign shut down the entire SSA market.

Spain’s six month and 12 month borrowing costs rose to their highest level since February at an auction on Tuesday, ahead of a sale of longer dated debt later in the week.

This week's funding scorecard focuses on some of Europe's key supranational and agency borrowers. Forthcoming editions will bring updates from other French, German, Spanish and Scandinavian names.

The European Financial Stability Facility priced a four year benchmark at the tight end of guidance on Wednesday afternoon, in what it says will be its last benchmark of the quarter.