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Euromoney: Born on a bench in Central Park

                                                        20 YEARS: A SCRAPBOOK

Euromoney June 1989


It all began on a park bench outside a ladies lavatory.

Visiting New York in April 1969, Patrick Sergeant, then City (Financial) Editor of London’s Daily Mail newspaper, and the late Lord Rothermere, the Mails proprietor were strolling in Central Park and had paused for a rest. Patrick suggested launching a monthly magazine to cover the growing Euromarkets, and Rothermere promptly agreed.

The first issue appeared two months later.

The markets themselves were still in their infancy.

Eurodollars had been around for over a decade; they were simply dollar deposits in banks outside the US, often traded between banks. But syndicated lending of Eurodollars by international banks was then a novel idea. And international offerings of Eurodollar securities through underwriters had just begun to grow — following the 1968 introduction of measures to curb foreign borrowing in the US.

The first Eurobond issue remains the subject of dispute. Some say the credit belongs to Petrofina, the Belgian oil company. which launched a multiple currency issue in1957 Others maintain that the pioneer was a 1961 European Unit of Account issue by SACOR, the Portuguese oil refining concern But a larger consensus credits Autostrade, the Italian motorway company. which offered $15 million of 15-year, 5.25% dollar bonds in July 1963, guaranteed by IRI, the Italian state-owned conglomerate. The issue was lead-managed by SG Warburg & Co.

Sir Ian Fraser who worked on the AutoStrade deal for Warburg, recalls that it took six months to prepare. The UK was not prepared to waive withholding tax, so the deal was signed in Amsterdam and launched in Luxembourg. But technically the bonds had no place of issue and no nationality, a fact which especially perplexed German banks.

The inner circle of five main underwriters split a fee of 15% (with 0.25% going to Warburg), and some 200 members of the selling group shared 2%. After signing, the underwriters were able to place only $13 million, but Bank of London and South America volunteered to take the rest.