26 June 2012

EU placed €2.3 billion long 15-year bond in support of Ireland

The EU today placed a €2.3 billion benchmark bond with April 2028 maturity, seeing strong investor demand. The proceeds will be on-lent to Ireland as part of the financial assistance package decided in December 2010, and following a successful completion of the sixth programme review.

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

The new transaction is again a successful EU issuance at the longer end of maturities provided to Ireland, after 30-year and 20-year bonds in the beginning of the year. Recent issuance brings the average maturity of EU loans to Ireland close to the targeted maximum average maturity of 12.5 years. Long-dated funding is extending the average maturity of the EU loans and thereby improves debt sustainability and fiscal consolidation of the beneficiary country.

The order book closed within two hours, containing orders of almost €3.7 billion. The new €2.3 billion bond matures on 4 April 2028, and pays a coupon of 2.875 per cent. Price was fixed at mid-swaps +68 basis points, giving a total yield of 2.877 per cent.

Funding cost will be passed on to Ireland without any margin; the disbursement to Ireland is foreseen for 3 July 2012, the settlement date of the bond. Geographically, Germany led the demand with 45 per cent of the allocation, followed by the UK (22 per cent), Scandinavia (9 per cent), the Netherlands (6 per cent), Switzerland (6 per cent) and France (5 per cent). Other Europe had 5 per cent. A low Asian take-up of 2 per cent is explained by the long maturity.

Distribution by investor type shows a good quality with 79 per cent going to real money investors and official institutions: insurances had 26 per cent, asset managers 25 per cent, central banks/official institutions 18 per cent, pension funds 10 per cent, banks 16 per cent, and others 5 per cent of the allocations.

Joint lead managers were Barclays, Credit Suisse, DZ Bank, Morgan Stanley and Société Générale CIB. Co-leads were Bank of America/Merrill Lynch, Crédit Agricole CIB, Goldman Sachs, JP Morgan, Natixis, RBC Capital Markets, UBS and Unicredit.

Full press release

© European Commission