EU-RUSSIA: More Leaders Support Ukraine 'Reparations Loan', But Obstacles Remain
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A growing number of EU leaders are voicing their support for mooted EU plans that could see EUR140bln of frozen Russian assets held in the Union utilised as a zero-interest "reparations loan" for Kyiv. The loan would then only have to be repaid once Russia has, in turn, repaid Ukraine for war damage. European Commission President Ursula von der Leyen said in late September that “We will strengthen our own defence industry by ensuring that part of the loan is used for procurement in Europe and with Europe.”
- In a notable boost for the prospect of the reparations loan, German Chancellor Friedrich Merz backed the idea in an FT op-ed. At today's informal meeting of EU leaders in Copenhagen, a number of EU leaders have backed the idea. Latvian PM Evika Silina said, “We have long called for using frozen Russian assets to aid Ukraine.” Finnish PM Petteri Orpo called the plan "a very good idea", while Estonian PM Kristen Michal said the frozen assets should be utilised "as much as possible". Dutch PM Dick Schoof says the proposal "should seriously be considered, as long as risks are covered".
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EGB SYNDICATION: Italy Dual Tranche: Mandate
"The Ministry of Economy and Finance has mandated Banco Bilbao Vizcaya Argentaria SA, Citibank Europe Plc, Deutsche Bank A.G., J.P. Morgan SE, Morgan Stanley Europe SE and Nomura Financial Products Europe GmbH for a dual tranche syndicated issuance of a new 7-year BTP due 15th of November 2032 and a €5 billion no-grow of a new 30-year BTP due 1st of October"
- "The transaction will be launched in the near future subject to market conditions. FCA/ICMA stabilization."
- "Please note that, consequently, the auctions of 7-year BTPs and BTPs with a maturity longer than 10 years, scheduled for the 11th of September 2025, will not take place", MEF adds.
- The announcements means a transaction tomorrow seems likely. MNI has seen a potential Italian syndication in September, specifically flagging "a 30-year BTP a possible candidate, possibly alongside either a 7-year BTP or 10-year BTP" in our daily publication.
EQUITY OPTIONS: EU Bank Strangle
SX7E (19th Sep) 215/245^^, bought for 2.15 in 6k vs 1.44k at 225.50.
EFSF ISSUANCE: Apr-29 / Feb-34 Tap Dual Tranche: Allocations Out
E1.0bln tap of the 3.5% Apr-29:
- Spread set previously at MS+9 (guidance was MS+10bps area)
- Hedge ratio: 111% vs DBR 0 ¼ 02/15/29
- Coupon: 3.500% (150 days accrued), Annual ACT/ACT
- Maturity: 11 April 2029
- ISIN: EU000A2SCAL3
E1.0bln tap of the 2.875% Feb-34 tap:
- Spread set previously at MS+33 (guidance was MS+34bps area)
- Hedge ratio: 100% vs DBR 2.2 02/15/34
- Coupon: 2.875% (207 days accrued), Annual ACT/ACT
- Maturity: 13 February 2034
- ISIN: EU000A2SCAN9
Across both tranches:
- Size combined: E2.0bln (follows E3.5bln maximum combined set earlier, MNI expected E3bln but saw a chance of a smaller transaction)
- Books: closed in excess of €6.5bn (inc. €500m JLM)
- Settlement: 8 September 2025 (T+5)
- Bookrunners: LBBW / NOMURA (DM/B&D) / TD
- Denoms: EUR 1,000 x 1,000
- Target market: Professionals / Eligible Counterparties only (all distribution channels), each as defined in MiFID II
- Issuer: European Financial Stability Facility (EFSF)
- Ratings: Aaa (stable) / AA- (stable) / AA-
- Risk Weighting: 0%
- Format: RegS / Bearer Notes (TEFRA rules apply, no communications with or into the U.S.)
- Timing: Hedge deadline at 12:40pm LDN. Pricing to follow after hedge book closes
