The European Stability Mechanism (ESM) completed its fourth quarter funding needs on Monday, raising the full €2 billion it had targeted
The ESM issued a new €2 billion 0% bond maturing on 16 December 2024. The spread was fixed at mid-swaps minus 8 basis points, for a reoffer yield of -0.582% and a new issue premium of 1 basis point. The final order book was €12.8 billion, excluding joint lead manager interest.
The joint lead managers were BofA Securities, NatWest Markets and UniCredit.
“The maturity was undersupplied this year and met strong demand especially from central banks. Today’s transaction completed the ESM’s annual funding programme,” said Silke Weiss, Acting Head of Funding and Investor Relations at the ESM.
In September, the ESM transferred €500 million of its third quarter funding needs to the fourth quarter when it issued a US dollar bond.
The ESM is rated AAA (S&P, stable), Aa1 (Moody’s, stable) and AAA (Fitch, stable).
The European Stability Mechanism (ESM) has the mandate to preserve financial stability in the euro area by providing financial assistance to Member States with severe financing problems.
It is a permanent inter-governmental institution, operating since October 2012. The shareholders of the ESM are the 19 euro area Member States. All financial assistance to Member States is linked to appropriate conditionality.
The ESM finances its assistance by issuing bonds and other debt instruments. It has a total subscribed capital of approximately €700 billion, which comprises €80 billion in paid-in capital and €624 billion in committed callable capital. The ESM’s maximum lending capacity is €500 billion.