The issuance spread was fixed at mid-swap plus 12 basis points, at the tight end of the initial price guidance.
The resulting interest rate of the loan to Ireland will be 5.51% composed of the cost of borrowing for the European Union (EU) at 2.59% plus a margin of 2.925% as decided by the Council on 7 December 2010.
The funds will be disbursed to Ireland on 12 January 2010.
According to EU, within less than one hour the book was oversubscribed by more than three times. Investor demand came from around the world and from all types of investors.
The EU borrows in euro for on-lending in euro to sovereigns only on a back to back basis.
Under the EFSM the EU can borrow up to EUR60bn to on-lend to any EU Member State, whereas under the Balance of Payments (BoP) facility, support is available only to Member States which have not yet adopted the EUR.
According to European Commission, in the context of the EFSM and based on the existing financial support program to Ireland, the EU’s funding program in 2011 could reach up to EUR17.6bn raised through benchmark transactions.
