RTRS:EFSF might delay three-year euro bond after France downgrade
LONDON, Nov 20 (IFR) - The European Financial Stability Facility, rated Aaa/AA+/AAA, "might delay" its expected new three-year euro benchmark following the downgrade of its second largest guarantor France, one bank managing the deal confirmed on Tuesday.
JP Morgan, Morgan Stanley and Natixis were mandated on Monday afternoon to lead manage the new deal, and immediately began marketing the trade to investors at mid-swaps flat to minus 2bp.
One bank managing the deal said that it was only "50/50" if the transaction would go ahead on Tuesday, as it faced "technical issues".
On Monday evening Moody's downgraded France by one notch to Aa1 from Aaa, with a negative outlook. France has a 21.83% shareholding in the EFSF, behind only Germany which had 29.07%.
No official communication has been sent to the market on Tuesday morning.
RBS' trading desk strategy note published on Tuesday following France's downgrade states "EFSF's Aaa had already a negative outlook and a downgrade to Aa1 seems likely." (Reporting By John Geddie, Editing by Helene Durand and Julian Baker)
