LONDON—The European Financial Stability Facility—the euro zone's temporary sovereign bailout fund—set final terms on its first bond to be issued in support of the Portuguese aid program.
Demand for the €5 billion ($7.22 billion), 10-year bond was solid, with order books reaching €8 billion, one of the banks running the sale said.
The bailout fund, which consists of €440 billion in loan guarantees, is one of the facilities set up to help support fiscally stressed European countries. It already has issued bonds for Ireland's bailout package, and functions alongside the European Financial Stabilization Mechanism—a €60 billion lending facility funded by the European Commission using the EU budget as collateral.
The bailout fund relies on each member of the bloc of euro-using nations guaranteeing the debt in proportion to its paid-up capital at the European Central Bank, plus an extra 20% to ensure that the fund will be able to repay creditors if a euro-zone government can't honor its guarantee.
The triple-A-rated facility plans to issue as much as €18 billion in bonds this year to fund its contribution to the bailout of Portugal, for which a €78 billion aid package was agreed to in May. It said it would issue four bonds for the country at €3 billion to €5 billion each.
Last week, it announced plans to issue a €3 billion, five-year bond for Portugal before the end of the second quarter.
Bonds issued for Portugal come on top of what had already been planned to help fund the bailout for Ireland. The bailout fund plans to issue two bonds for the Irish program in the second half of 2011 to reach the remaining funding target of as much as €10 billion.
Final price forecast for the latest deal was in line with the initial levels touted to investors, at 0.17 percentage point more than the midswap rate—a benchmark for bond pricing, derived from the cost of swapping fixed and floating-rate interest payments.
Barclays PLC's Barclays Capital, Deutsche Bank AG and HSBC Holdings PLC are joint lead managers on the transaction.
The facility will remain in place until 2013, when the permanent bailout vehicle for troubled euro-zone countries, the European Stability Mechanism, will take over.
Source: http://online.wsj.com
Demand for the €5 billion ($7.22 billion), 10-year bond was solid, with order books reaching €8 billion, one of the banks running the sale said.
The bailout fund, which consists of €440 billion in loan guarantees, is one of the facilities set up to help support fiscally stressed European countries. It already has issued bonds for Ireland's bailout package, and functions alongside the European Financial Stabilization Mechanism—a €60 billion lending facility funded by the European Commission using the EU budget as collateral.
The bailout fund relies on each member of the bloc of euro-using nations guaranteeing the debt in proportion to its paid-up capital at the European Central Bank, plus an extra 20% to ensure that the fund will be able to repay creditors if a euro-zone government can't honor its guarantee.
The triple-A-rated facility plans to issue as much as €18 billion in bonds this year to fund its contribution to the bailout of Portugal, for which a €78 billion aid package was agreed to in May. It said it would issue four bonds for the country at €3 billion to €5 billion each.
Last week, it announced plans to issue a €3 billion, five-year bond for Portugal before the end of the second quarter.
Bonds issued for Portugal come on top of what had already been planned to help fund the bailout for Ireland. The bailout fund plans to issue two bonds for the Irish program in the second half of 2011 to reach the remaining funding target of as much as €10 billion.
Final price forecast for the latest deal was in line with the initial levels touted to investors, at 0.17 percentage point more than the midswap rate—a benchmark for bond pricing, derived from the cost of swapping fixed and floating-rate interest payments.
Barclays PLC's Barclays Capital, Deutsche Bank AG and HSBC Holdings PLC are joint lead managers on the transaction.
The facility will remain in place until 2013, when the permanent bailout vehicle for troubled euro-zone countries, the European Stability Mechanism, will take over.
Source: http://online.wsj.com
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