Peripheral instability fails to derail EFSF bond issue

Tue Feb 26, 2013 6:14am EST

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LONDON, Feb 26 (IFR) - Orders are in excess of EUR3bn for the European Financial Stability Facility's new three-year bond, said a market source on Tuesday, allaying fears that an aggressive sell-off in Europe's periphery may dull investor appetite.

Credit Suisse, JP Morgan and Morgan Stanley have left guidance unchanged at mid-swaps minus 5bp area, offering investors around a 5bp premium to buy the new bonds.

"It is a sign of strength for the EFSF to come in this environment," said one bank managing the deal.

"It shows that the market has hiccups but Europe ticks on," he added.

The transaction will be the Aa1/AA+/AAA rated rescue fund's last benchmark transaction of the first quarter.

EFSF has so far raised EUR13bn of its EUR16.5bn Q1 long-term funding target, including new seven- and five-year benchmarks, an approximate EUR1bn tap of its 10-year via auction, and a EUR1bn tap of its 25-year via syndication. (Reporting by John Geddie; Editing by Julian Baker)

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