ESM-EFSF

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.

The European Financial Stability Facility plumped for an unusual four year maturity when it mandated for a benchmark on Tuesday afternoon, despite several SSA bankers predicting a longer-dated trade for this week. Investor demand for a 2017 maturity and the issuer’s desire to rebuild its curve of tappable issues after Cyprus’s bailout drove the decision to sell a four year, said bankers on the mandate.

SSA syndicate bankers are predicting either a seven year benchmark from the European Financial Stability Facility (EFSF) next week, or a deal at the far end of the curve, after they made their recommendations to the borrower this week. The European Investment Bank and KfW are also expected to issue either next week or the week after.

The European Financial Stability Facility (EFSF) priced on Thursday a €5bn 10 year benchmark as it starts to build a new curve of tappable benchmarks. The deal came at the tight end of guidance having attracted a hefty order book despite heavy SSA supply in the euro market already this week.

The EFSF has mandated three banks for a 10 year benchmark deal, which, should it go well, will wrap up a stellar week for borrowers associated with Europe’s sovereign funding crisis. The bail-out vehicle will follow a thumping €7bn sale in 10 years from Spain on Tuesday and what looks to be a successful €6bn 30 year sale from Italy on Wednesday.

Bank Nederlandse Gemeenten priced a €1.25bn five year note on Tuesday at a level that skimmed its curve, according to one of the leads.

The EFSF sent out requests for proposals on Tuesday ahead of a deal expected for next week. Bankers expect the issuer to use next week’s window to print at the long end of the curve. The supranational has also expanded its funding target for the quarter in response to better than expected market conditions.