LONDON: The European Union is planning to bring its third long-dated benchmark of 2012 later on Tuesday, providing a test of investors' appetite for eurozone debt as the region's sovereign crisis show signs of escalating again.
Lead managers Barclays, Deutsche Bank, DZ Bank and HSBC are gauging investors thoughts at mid-swaps plus mid to high 80s for the 26-year transaction. The trade will have a size of EUR1bn minimum and will price later today.
The transaction comes after two weeks of heightened volatility in eurozone peripheral sovereign. Spain in particular has been in focus with yields moving above 6% for the first time in four months at the end of last week and five-year CDS hitting an all-time high of 520bp on Monday.
This has not deterred the EU from raising longer-dated debt again. The new April 2038 issue follows 20-year and 30-year deals priced already in 2012. According to a banker away from the bond, the EU is paying a thin new issue premium of around 0 to 5bp.
The issuer is planning to raise EUR4.5bn in the bond market by the end of May and is targeting maturities between seven and 30-year.
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