Tuesday, 8 November 2011

(BN) EFSF Bailout Fund Said to Revive 10-Year Bond Sale Amid Deepening Crisis

Bloomberg News, sent from my iPad.

EFSF Bailout Fund Said to Revive Bond Sale as Crisis Deepens

Nov. 7 (Bloomberg) -- The European Financial Stability Facility revived the 3 billion-euro ($4.1 billion) bond sale it pulled last week even as the region's sovereign crisis deepened.

The bailout fund is offering the bonds due February 2022 at a yield of about 10 basis points more than its existing 2021 notes, which equates to 104 basis points over the swap rate, according to five people with knowledge of the transaction. The proceeds will be used to help fund the rescue of Ireland.

The EFSF postponed the bond sale on Nov. 2 amid market turmoil prompted by Greek Prime Minister George Papandreou's call for a referendum on the rescue pact for his country. The euro-region's woes have deepened since then, with Papandreou signalling he'll step down in favor of a national unity government, while concerns about Italy's creditworthiness sent its bond yields soaring to records.

"The EFSF is paying the price for being a relatively new issuer, and for the increasing concerns about a sustainable solution for the peripheral economies," said Ivan Comerma, head of treasury and capital markets at Banc Internacional D'Andorra.

The Luxembourg-based EFSF, which was established in June 2010, has already raised 13 billion euros from three bond issues this year, according to data compiled by Bloomberg.

Its existing notes have underperformed European benchmark debt, with the extra yield over governments on its 2021 issue widening to 164 basis points, the most since the notes were sold in June, Bloomberg Bond Trader prices show. A basis point is 0.01 percentage point.

Barclays Capital, Credit Agricole CIB and JPMorgan Chase & Co. are managing today's sale.

To contact the reporters on this story: Esteban Duarte in Madrid at eduarterubia@bloomberg.net Ben Martin in London at bmartin38@bloomberg.net

To contact the editor responsible for this story: Paul Armstrong at Parmstrong10@bloomberg.net

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