Strong demand for $1.5 billion EBRD global bond

By Anthony Williams

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The EBRD has successfully launched a $1.5 billion two-year global bond in the first issue by a supranational to be priced below Libor in 2009. The issue is jointly lead managed by Daiwa SMBC, HSBC, Morgan Stanley and RBC Capital Markets.

The coupon of 1.25% is payable semi-annually and the issue price is 99.988%, offering investors a spread over US Treasuries of 0.329%.

Demand for the triple-A borrower’s latest issue outstripped the initial offer of $1 billion by more than 2-1/2 times at the first indicated price of five basis points below mid-swaps. The amount was subsequently raised to $1.5 billion and the pricing adjusted to mid-swaps minus 10.

“This reaction to the bond shows there is strong demand in the market for high-quality paper,” said the EBRD’s Head of Funding, Isabelle Laurent.

The deal saw broad geographic demand, with 37% placed in Asia, 24% in the United States, 21% in the Middle East and Africa, and 18% placed in Europe. Two-thirds of the deal was placed with central banks and official institutions.

The EBRD has raised in excess of €3.5 billion so far this year, including its issues in the local currencies of the countries where it invests.

A five billion, five-year rouble bond issued in April this year will be followed up in the coming weeks by a further three billion five-year rouble issue.

The EBRD raises funds in local currencies primarily for on-lending to borrowers that have no or only limited revenues in foreign exchange and so helps them reduce foreign currency risks.

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