As Brussels sold its new five- and thirty-year debt, four banks that had previously suspended EU bond sales were selected to manage Block’s latest trading on Tuesday.
JP Morgan, Crédit Agricole, Deutsche Bank and UniCredit were banned from participating in the first € 20 billion debt sale to fund the EU’s € 800 billion recovery fund earlier this month due to past antitrust violations. It was one of only 10 lines.
They were later revived after providing evidence of “corrective action” taken by the European Commission to handle debt issuance on behalf of the EU. Goldman Sachs, the fifth bank to trade on Tuesday, was not among the banned banks.
As Brussels transformed into one of Europe’s largest bond issuers, the short-term ban temporarily threatened some of the largest banks in the bond market with a substantial new source of fees. The EU plans to raise € 80 billion for the collection fund by the end of the year and will launch a regular debt auction in September.
As the EU continued, investors ordered more than € 170 billion in debt of € 15 billion sold on Tuesday (€ 9 billion for 5-year bonds and € 6 billion for 30-year bonds). Attract strong demand.
A 30-year bond priced at a yield of about 0.7% is higher than Germany’s 0.31% implicit borrowing cost for the same period, but lower than France’s 0.94%. According to ING analyst Antoine Bouvet, this should help alleviate concerns that the future huge supply of EU’s new long-term debt will push up block borrowing costs compared to member states.
“It’s encouraging that you don’t have to pay a lot of money to see so many buyers,” he said.
Four banks were blocked from participating in bond sales because they were involved in a previous market fraud scandal. JPMorgan was one of four banks that were fined two years ago for participating in currency market manipulation from 2007 to 2013.
UniCredit was one of five banks that were found to have participated in a fixed income cartel during the Eurozone debt crisis 10 years ago, while Deutsche Bank and Crédit Agricole were involved in another fixed income cartel. It was initially excluded by the April ruling that it was doing so. ..
EU bond sales run by four banks previously suspended for antitrust Source link EU bond sales run by four banks previously suspended for antitrust