ESM-EFSF

The European Stability Mechanism (ESM) has laid out its funding plans for the rest of the year, including how many benchmark trades it plans to issue. The funds will go towards refinancing debt taken on for the Spanish bank bailout as well as part of an expected €9bn to raise for Cyprus.

The EFSF issued its second tap deal in a week on Monday as it prepares for Cyprus to step out of being one of its guarantors. Once Cyprus leaves the guarantee structure, the EFSF will no longer be able to tap bonds issued before that date, which is expected to be this week. Unédic, meanwhile, has hired four banks for a short-dated euro issue.

The European Financial Stability Facility (EFSF) tapped a three year bond for €1.5bn on Wednesday afternoon. It was joined in euros by the State of Saxony-Anhalt, which priced a heavily oversubscribed 10 year benchmark at a tight price earlier in the day.

Demand for a five year benchmark from the European Financial Stability Facility on Tuesday exceeded expectations, allowing the borrower to print its biggest ever syndication and at a small concession to secondaries. The European bailout borrower was joined in euros by the Republic of Finland, which was set to price an oversubscribed €4bn 10 year as SSA Markets went to press.

Finland and the EFSF announced mandates for euro benchmarks on Monday afternoon.

The European Financial Stability Facility (EFSF) brushed aside concerns that volatility caused by Cyprus bailout negotiations could hurt demand for its debt on Wednesday, when it brought a tap of its €3bn 0.5% March 2016s flat to the outstandings.

Nederlandse Waterschapsbank mandated three banks to run a three year dollar deal on Monday, thumbing its nose at any volatility caused by a bailout package for Cyprus announced at the weekend [see separate story].

The European Financial Stability Facility was the only SSA to brave a syndication in euros on a day when the markets were rocked by the results of Italy’s government elections. Despite the volatility demand was strong enough for the issuer to hit its size target and print a benchmark.

The European Financial Stability Facility is set to be the first issuer out with a syndication following government elections in Italy at the weekend. The issuer has mandated a trio of banks to lead manage a three year deal.

SSA issuers are queuing up to print new business after a week that saw a rampant dollar market which included $10bn of new funding for the EIB and KfW and the first Spanish dollar trade in four years, and a euro market which gobbled up a new Belgian OLO and forgave Agence Française de Développement for attempting too tightly priced a deal a fortnight ago (see separate coverage).

The euro market was easily outshone by dollars this week. While it produced a pair of benchmarks that were comfortably oversubscribed, the concession that issuers had offered contrasted sharply with dollars, where three issuers priced $13bn of debt in just 48 hours at levels right on top of their curves. But that’s no reason for despair, the euro market is still robust.

The EFSF tapped 24 year debt, its longest dated bonds, on Thursday in a transaction driven by reverse inquiries. The deal follows an auction of 10 year debt earlier this week, and leaves the issuer more than three quarters of the way through its projected funding target for the quarter.