Italian bank launches a 500 million euro bond -- Y2K concernsgreenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
Monte Paschi launches millennium bug bond
09:35 a.m. Aug 13, 1999 Eastern
MILAN, Aug 13 (Reuters) - Italian bank Monte dei Paschi di Siena (MPS) on Friday launched a 500 million euro bond to provide a reservoir of cash in case of possible glitches in treasury management caused by the 2000 millennium date change.
Banks are in one of the sectors which could be hardest hit by the so-called year 2000, or millennium, bug.
Older computer systems that use only two-digits to represent years could malfunction if they interpret the zeroes in the year 2000 to mean 1900 when the year ends on December 31.
A senior MPS official said the year 2000 problem also explained the unusually short one-year maturity of the issue.
The 500 million euro, September 1 2000 floating rate note was launched Friday morning by lead manager Merrill Lynch.
The issue and reoffer price is 100.01 while the coupon is half-yearly and equal to five basis points above the six-month Euribor rate. The FRN was launched under MPS's Euro Depositary Receipt programme.
``The loan responds to the need for extra funds with respect to our medium-term funding objectives. In particular, it is a cushion of liquidity to face up to eventual problems in treasury or systems management resulting from the millennium bug,'' the MPS official said.
``In the United States the Federal Reserve has stepped in guaranteeing banks special lines of financing, but in Europe there seems to be less attention to the problem and less openness,'' he added.
Most European Union financial markets will close on December 31 to minimise risks and the European Central Bank has decided to close its Target settlements system covering euro zone transactions to give banks time to prepare their systems ahead of the date change.
-- (M@rket.watching), August 13, 1999