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Thursday, 19 October 2017

IFR Markets: EFSF delays bond offering

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The European Financial Stability Facility (EFSF) has decided not to go ahead with a EUR3bn max long 10-year deal according to sources familiar with the matter.

The issuer mandated Barclays Capital, Credit Agricole and JP Morgan on Monday and market expectations had been that a deal would launch and price on Wednesday.

The deal is now expected to price over the next two weeks. According to one of the lead managers on the deal “the EFSF has no immediate urgency to fund and felt that doing a deal today might be rushing things, especially given recent market volatility.”

“The issuer did not want to give the impression that it was being opportunistic,” the banker said. “The last couple of days have been terrible and had they gone ahead with the deal, it could have been viewed as desperation.”

One banker away from the deal expressed surprised at the decision, pointing out that Ireland has a redemption on November 11. According to Tradeweb, €4.39bn redeems on that date.

Since the banks were mandated for the issue, market conditions have considerably worsened and the issuer’s spreads have widened out. The EFSF’s outstanding 10-year which was trading at 75bp over mid-swaps when the bond was mandated is now quoted at 90bp over.

Greek Prime Minister George Papandreou’s call for a referendum on the latest EU aid deal sent markets in a downward spiral on Tuesday morning.

(For more real-time market news, www.ifrmarkets.com)

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