Happy 10th anniversary to the bill programme too!
It is not only the 10th anniversary of the EFSF bond issuance. 2011 saw the launch of the EFSF bill programme. By offering 3-month and 6-month bills and announcing in advance its quarterly auction calendar, the EFSF provided an opportunity for short-term investors whilst creating a tool to enhance its own liquidity. Established as the permanent institution in 2012, the ESM took over the bill programme in December 2012.The ESM is the only supranational/agency that offers a bill programme.
As part of our mandate, the ESM provides financing to governments and will act as the backstop for the Single Resolution Fund. Reducing funding liquidity risk and being able to react quickly are key to the success of our funding strategy. The ESM bill programme gives us this flexibility and the ability to raise financing quickly.
Over the course of these 10 years, the ESM has become well established in the T-bill market. In 2020, the ESM issued a total amount of over €60 billion in bills making it the sixth largest issuer in the euro bill market. The ESM offers 3-month and 6-month and, since April 2020, 12-month bills with three auctions per month. The new 12-month bill was introduced as another tool to help reduce funding liquidity risk . It also helps to increase the size of the liquidity buffer, if required. The quarterly issuance calendar is shown above. The ESM bills benefit from the highest short-term rating: Moody's P-1, Fitch F1+ and, since August 2020, S&P A-1. Demand for the bills is high; the bid to cover ratio in 2021 has ranged from 5.0 to 7.1. In this the ESM is fully supported by German Bundesbank, which operates the ESM Bidding System. The ESM market group, currently 37 banks, have access to the system. The auctions are carried out as multiple price auctions. Dealers can enter non-competitive and price bids.
The increase in supply since 2018…
…has been strongly supported by an increase in demand.
- Highest ever yield: 0.2664% for a 6m bill on 14 January 2012 (seems incredible now!)
- Lowest ever yield: -0.7318% for a 3m bill on 05 December 2017
- Auction days: First, second, and third Tuesdays in a month
- Bidding period: 08h00-12h30 CET
- Size: minimum sizes €1 billion