The European Commission has launched a €5bn bond with ten years maturity. The operation took place under the European Financial Stabilisation Mechanism (EFSM). The funds raised will finance a further loan to Portugal, which receives lending as part of the financial assistance package.
The new bond is the second with ten years maturity placed by the EU under the EFSM. The €5bn benchmark matures on 21 September 2021, pays a coupon of 2.75% and was priced at mid-swaps +20 basis points.
Investor interest was solid and books including about 100 accounts were closed within less than three hours, having subscriptions of about €7bn. Successful placement shows the confidence of markets in the euro zone.
Substantial investor demand came from across Europe – in particular, from France (23%), Germany/Austria (22%) and the UK (17%) – as well as from Asia (12%). The rest of Europe represented 24 %, with particular demand from Benelux, Nordic Countries and Switzerland. In terms of investor type, demands from banks and financial institutions were the most important (56%), followed by investment managers (21%), Central Banks (17%) and insurance/pension funds (5%).
Joint lead managers were Barclays, BNP Paribas, Commerzbank, HSBC and UBS. Co-leads were Bank of America Merrill Lynch, BBVA, Citibank, Credit Suisse, DZ Bank, Goldman Sachs, Morgan Stanley and Société Générale.
Disbursements to Portugal will be made on 21 September 2011, the settlement date of the bond.
