Europe’s emergency bailout fund, the EFSF, has raised €8bn in its largest-ever sale of long-dated debt, in the latest sign of investors’ enthusiastic reaction to the French election result.
The European Financial Stability Facility raised €6bn in a 10-year issue priced at 0.828 per cent and a further €2bn by tapping a 2043 maturity bond.
Both parts of the fundraising were more than twice oversubscribed, say bankers.
The total amount raised equals two previous €8bn single-tranche issues by the EFSF in 2013 and 2014, but both of those were five-year maturities. The EFSF’s previous largest 10-year maturity issue was €5bn, which it raised four years ago.
Relief over Sunday’s first round French presidential election result has seen stocks rally and the euro gain in the past two days, while European government bond yields have risen and the spread between French and German bonds – a key barometer of political risk – has narrowed significantly. Yields move inversely to prices.
Jamie Stirling of BNP Paribas said the EFSF’s deal showed investors’ renewed appetite for riskier assets also extended to new issuance as well.
“The success of the trade was certainly helped by the timing, given market sentiment after the first round of the French election,” he said.
BNP Paribas was one of the bookrunners for the deal, along with JP Morgan and UniCredit.
Having been set up at the height of the continent’s debt crisis, the EFSF has since been taken over in the financing of eurozone bailouts by the permanent European Stability Mechanism.