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UPDATE 1-ESM appoints banks for European roadshow
By John Geddie
LONDON, Oct 8 (IFR) - The European Stability Mechanism (ESM) has appointed Deutsche Bank, RBS and SG CIB to arrange investor meetings across Europe in early November, bank sources said.
The roadshow will take place in London, Frankfurt and Paris, with sources saying the eurozone sovereign rescue fund will target its first bond offering for early January.
The ESM, which was officially inaugurated on Monday, has already met investors in Asia, sources said.
One source said the new entity is expected to have a higher credit rating than the temporary rescue vehicle, the European Financial Stability Facility, and will therefore be easier to market to investors.
The EFSF is Triple A rated by Moody's and Fitch, but AA+ from S&P. Fitch assigned the ESM a Triple A and stable rating on Monday citing "exceptionally strong mechanisms for exercising callable capital" and a "relatively high capitalisation ratio."
EFSF is a company established under Luxembourg law, whereas the ESM is an intergovernmental institution established under international law with the 17 euro area member states as its shareholders.
Within the next 15 days the ESM will receive EUR32bn of paid-in capital, with full subscription of EUR80bn by 2014. It also has committed callable capital of EUR620bn, for a total subscribed capital of EUR700bn and an effective lending capacity of EUR500bn.
In contrast, the EFSF has a lending capacity of EUR440bn, based solely on guarantees from its Triple A rated shareholders.
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