Bloomberg News

EFSF Starts Gauging Investor Interest for Portugal Aid Bond

June 14, 2011

(Updates with indicative yield in second paragraph.)

June 14 (Bloomberg) -- The European Financial Stability Facility started gauging investor interest for its 5 billion- euro ($7 billion) bond sale to raise money for Portugal’s aid program, according to two people with knowledge of the sale.

The AAA rated fund overseen by euro-area countries is issuing 10-year notes in its second sale, EFSF said in a June 10 statement. The notes may be priced to yield about 16 to 18 basis points more than the benchmark swap rate, said the people, who declined to be identified as the matter is private.

The Luxembourg-based EFSF first sold bonds Jan. 25, when it raised 5 billion euros from a sale of five-year notes that were priced to yield 6 basis points more than swaps, data compiled by Bloomberg show. A basis point is 0.01 percentage point.

The sales follow two transactions by the European Union’s European Financial Stabilisation Mechanism in May, which raised a total 9.5 billion euros to help finance the bailouts of Ireland and Portugal. The European Union increased its borrowing forecasts for the EFSM and the EFSF on May 19 after Portugal joined Ireland in seeking aid.

The EFSF hired Barclays Capital, Deutsche Bank AG and HSBC Holdings Plc to manage the sale of the 10-year notes. The fund also expects to sell 3 billion euros of five-year bonds “before the summer break,” the EFSF said in a June.

--Editors: Andrew Reierson, Michael Shanahan

To contact the reporters on this story: 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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