Bloomberg News

European Union Sells $2.3 Billion of Bonds for Portugal

April 17, 2012

The AAA rated bailout fund, operated by the European Commission and backed by the EU’s member states, has raised 34 billion euros from bond markets since January 2011 to help fund the rescues of Portugal and Ireland. Photographer: Mario Proenca/Bloomberg

The AAA rated bailout fund, operated by the European Commission and backed by the EU’s member states, has raised 34 billion euros from bond markets since January 2011 to help fund the rescues of Portugal and Ireland. Photographer: Mario Proenca/Bloomberg

The European Union tapped the bond markets for the third time this year with a sale of 26-year securities to help fund the bailout of Portugal.

The European Financial Stabilisation Mechanism is raising 1.8 billion euros ($2.3 billion) of notes priced to yield 87 basis points, or 0.87 percentage point, more than the swap rate, according to a statement from Amadeu Altafaj, a Brussels-based spokesman at the European Commission, the executive arm of the EU.

The offering is the first since the EFSM raised 3 billion euros from 20-year notes on Feb. 24, according to data compiled by Bloomberg. The AAA rated bailout fund, operated by the European Commission and backed by the EU’s member states, has raised 34 billion euros from bond markets since January 2011 to help fund the rescues of Portugal and Ireland.

“The good demand and quick execution of such a long maturity indicates that confidence is returning,” said Ciaran O’Hagan, head of euro-area rate strategy at Societe Generale SA in Paris. “The success of the EU’s deal will help reopen the market for other issuers.”

The yield premium on EFSM’s 3.375 percent bonds due 2032 has narrowed to 64 basis points more than the swap rate from an issue spread of 78 basis points, according to Bloomberg Bond Trader prices.

Barclays Plc, Deutsche Bank AG, DZ Bank AG and HSBC Plc are managing the new issue, said the banker, who declined to be identified because the information is private.

To contact the reporter on this story: Hannah Benjamin in London at hbenjamin1@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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