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Funding

ESM raises $2bn through 2-year bond



Headquarters of the European Stability Mechanism (ESM) in Luxembourg on Jun.15, 2017 Photo: Alexandros Michailidis/Shutterstock

Headquarters of the European Stability Mechanism (ESM) in Luxembourg on Jun.15, 2017 Photo: Alexandros Michailidis/Shutterstock

The European Stability Mechanism (ESM) completed its third quarter funding by raising $2 billion after issuing a 2-year bond.

The intergovernmental organisation located in Luxembourg which helps euro area countries in severe financial distress, announced the news on Wednesday.

While the euro remains its main funding currency, the ESM launched its inaugural US dollar transaction in October 2017 to broaden its investor base and to achieve funding cost advantages.

In a press release, the ESM wrote that the spread of the 0.25% coupon bond, which matures on 8 September 2023, was fixed at mid-swaps minus 1 basis point, for a reoffer yield of 0.290%. It further added that the order book was in excess of $6.1 billion, excluding joint lead managers. 

“For the ESM’s fifth US dollar bond, we returned to the short end, a space we felt had been undersupplied by the SSA market in 2021. This 2-year bond attracted a wide range of investors, which helped to diversify our investor base. Participation from the Americas was particularly high at almost 40%, the highest ever seen in our dollar transactions,” said Silke Weiss, Acting Head of Funding and Investor Relations.

The joint leader managers of the ESM transaction were Bank of America, Citi and TD Securities.

The latest bond will be listed on the Luxembourg Stock Exchange