LONDON (Dow Jones) – The first issue of the European financial stabilization facility (EFSF) with a maturity of five years has met on Tuesday as strong demand from investors. The issue was oversubscribed more than eight times, for the offered volume of EUR 5 billion bids were received for more than 40 billion EUR from over 500 addresses, as a syndicate bank said.
The price indication for the initial return was set at six basis points over mid-swaps. The mid-swap is an important benchmark in the interbank market. The three banks, Citigroup, HSBC and Societe Generale are joint lead managers in this first EFSF emission, with the EUR 5 billion to be included in the capital market to Ireland to help the financial crunch. The EFSF has all three major rating agencies are an "AAA" rating.
As part of the Support Programme for Ireland EFSF plans in the years 2011 and 2012 a total capital raising of up to EUR 26.5 billion. After the acute debt crisis in the spring of 2010, the EU had put up with the International Monetary Fund (IMF), the Euro-shield with a total volume of 750 billion EUR. Its core consists of the EFSF, which has a circumference of 440 billion EUR and is supported by the euro countries. Added to IMF assistance come in the amount of EUR 250 billion and a credit line of the EU Commission of 60 billion EUR.
DJG / DJN / apo / mle / dok