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17 April 2012

EU places €1.8 billion 26-year bond for Portugal


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The operation met with widespread investor demand. The proceeds will be on-lent to Portugal following a successful conclusion of the third programme review, as part of the financial assistance package decided in May 2011.


The transaction was carried out by the European Commission on behalf of the EU under the European Financial Stabilisation Mechanism (EFSM).

The new deal is yet another successful EU long-term issuance, following bonds with 20-year and 30-year maturities in January and February 2012. It extends further the average maturity of the EU loans to Portugal. The Commission considers the successful issuances a sign of confidence in the European stability measures.

The size of the transaction was limited by the overall average maturity of the EU loan to Portugal which is capped to 12.5 years. Additional funding of €2.7 billion will be done until the end of May for Portugal in shorter maturities.

The €1.8 billion bond matures on 4 April 2038, pays a coupon of 3.375 per cent and was priced at mid-swaps +87 basis points, for a total yield of 3.428 per cent. The funding cost will be passed on to Portugal without any margin. The order book was closed within less than 1.5 hours, containing orders of more than granularity with almost 120 accounts. It was closed within less than two hours, containing orders of more than €2.6 billion from almost 70 accounts.

Geographically, Germany led the demand with 74 per cent of the allocations, followed by UK (14 per cent), Scandinavia (5 per cent), Benelux (2 per cent) and Switzerland (2 per cent). The remainder of allocations was made to 'other Europe'.

In terms of investor type, insurances had 49 per cent of the allocation, asset managers 21 per cent, and pension funds 20 per cent, banks 5 per cent, Central Banks/Official Institutions 4 per cent and others 1 per cent.

Joint lead managers were Barclays, Deutsche Bank, DZ Bank and HSBC. Co-leads were Commerzbank, Credit Suisse, Goldman Sachs, ING, JP Morgan, Morgan Stanley, Société Générale and UBS.

The disbursement to Portugal is foreseen for 24 April 2012, the settlement date of the bond.

Press release



© European Commission


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