ESM-EFSF

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.

The EFSF auctioned a tap of 10 year bonds on Tuesday, the longest dated auction the issuer has done to date. The issuer was able to reach its minimum target and priced at a level very close to its curve, according to bankers. However, some syndicate bankers were left perplexed by the opaqueness of the process.

With a 10 year auction expected to go swimmingly on Tuesday, the EFSF is not ruling out the possibility of a syndicated trade later this week. Syndicate bankers are confident that Tuesday’s auction will go well, but they are less sanguine on the prospects for a second trade.

The EFSF rounded up a giant order book for its second benchmark deal of the month on Tuesday ensuring its industrial scale funding task this year is off to a flying start.

The EFSF has mandated three banks for its second deal of the year. The trade will be a new five year line.

The triumphant return of Italy to the syndicated market with a 15 year conventional bond and a successful bills auction by the Kingdom of Spain [see separate story] has given another massive boost of confidence to peripheral Europe, already buoyed by Ireland’s €2.5bn tap issued last week.

The Italian treasury has wasted no time in returning to the syndicated benchmark market this week by awarding four banks the mandate for a new bond, following a stellar opening week for SSAs. Meanwhile, the European Financial Stability Facility (EFSF) has also elected to return to the new issue market and other borrowers will not be far behind, say senior bankers.

Bankers are preparing their RFPs for the European Financial Stability Facility (EFSF), which is expected to price its first euro trade of the year next week and is thought likely to want to print big. Meanwhile, the Kingdom of Belgium’s first syndication in nine months roared into the market today, booking over €7bn of orders.