Mensajepor Mr_Baca » Mar Sep 13, 2011 10:43 am
DJ EUROBONDS:EU Plans Bailout Bond As Credit Market Tone Improves
13-Sep-2011
By Art Patnaude and Sarka Halasova
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--The European Union announced plans for its latest bond issue to support the Portuguese bailout as volatility reigned in the credit markets, with a more positive tone prevailing into the afternoon.
While it was not the only transaction announced, the E.U. deal took center stage with its benchmark-sized, 10-year bond.
The proceeds will be used to support Portugal through the European Financial Stabilization Mechanism, or EFSM, a EUR60 billion lending facility funded by the European Commission and backed by the EU budget. The EFSM is similar to the facility that had previously been set to help non-euro area countries such as Latvia, Hungary and Romania.
Elsewhere, the securitization market showed its resilience when Santander U.K. PLC set price guidance on its dollar, euro and sterling-denominated residential mortgage-backed securities from its Holmes 2011-3 vehicle.
Two tranches were pre-placed, while the other four are expected to launch and price Wednesday.
In covered bonds, Credit Mutuel CIC Home Loan SFH planned to increase the size of its existing EUR1.65 billion covered bond issue maturing in March 2021. Initial price guidance for the tap has been set in the area of 110 basis points over midswaps.
Also, a group of German states, or Laender, are planning to launch a EUR1 billion, seven-year bond. The deal is expected to price Wednesday.
Although Wessex Water Services Finance PLC, U.K. housing association Moat Homes, and Australian gas infrastructure company APA Group (APA.AU) were all in the sterling pipeline last week and due to launch this week, a syndicate banker noted that a couple were still roadshowing this week and that the earliest they could come to issue would be Thursday or Friday.
Aside from the primary market, the credit default swap indexes were highly volatile, which mean deals will continue to be launched when windows appear, the banker said.
Around 1315 GMT, the European CDS indexes were tighter, where they opened the day, although part of the morning saw a widening move that pushed banks to fresh record levels. French and Italian banks leading the way amid concerns about their exposure to the intensifying sovereign debt crisis.
The iTraxx Europe index was 2.5 basis points tighter at 196/197.3 basis points, the Crossover index was 12 basis points tighter at 175/790 basis points, and the SovX Western Europe index was 0.5 basis points tighter at 350.5/355.5 basis points, according to Markit.
