ESM issues 1.6 billion euros in three-month bills with a winning interest rate of 2.502% and a bid-to-cover ratio of 2.3.

⑴ The European Stability Mechanism (ESM) issued a €1.6 billion three-month short-term note through the German central bank on Tuesday, with a weighted average winning yield of 2.502% and a bid-to-cover ratio of 2.3.⑵ Amid the ongoing global bond market sell-off, three-month notes, as ultra-short-term instruments, are less sensitive to rising interest rates. The bid-to-cover ratio of 2.3 times indicates that institutional funds still have steady demand for high-rated eurozone short-term instruments.⑶ As a European financial stability tool, ESM's short-term financing costs directly reflect the market's pricing of eurozone credit risk. The winning yield is higher than previous rounds, consistent with increasing expectations for European Central Bank rate hikes and the imminent rise of the overnight deposit facility rate.⑷ Looking ahead, attention should be paid to ESM’s future debt issuance plans across various maturities and changes in eurozone banking system liquidity. If short-term rates continue to follow policy rates higher and long-term sell-off pressure remains unresolved, a steeper yield curve will further elevate overall financing costs in the eurozone, posing new challenges to the debt sustainability of peripheral countries.