Asian and Middle-East investors have thronged to buy the first issue of AAA-rated bonds by the eurozone’s new bail-out fund, marking a key moment in the evolution of Europe’s monetary union.
The auction of €5bn (£4.3bn) of five-year bonds to fund the first stage of the Irish loan package was nine times subscribed, reflecting appetite for bonds ranked with core German or French debt but offering higher returns. The yield was 2.89pc, compared with 2.31pc for Bunds.
The outcome was not in doubt after Japan said it would buy 20pc of this month’s total issue by the European Financial Stability Facility (EFSF), and China emerged as a white knight for EMU debt. Asian investors bought 38pc of the issue.
“It is the biggest order book ever. We will check before notifying the Guinness Book of Records but nobody can remember anything like that in the world,” said Klaus Regling, head of the EFSF. Ralf Umlauf from Helaba said the auction was “a step in the direction of a eurobond”.
The demand came from over 500 investors and totalled over $ 60 billion (about €45 billion).
Tags: China, Eurobond, European Financial Stability Facility, European Union, Japan, Middle-East, record demand
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