European Bank for Reconstruction and Development: The first challenge is related to pricing. Pricing reflected market yields and referred to the "benchmark" rate. The market yields were compounded through the national Treasury yields, but there was no such Treasury yield for the ECU, since this was not an actual currency for the EU. Issues such as lack of liquidity for the European market and others meant that the European Bank would have difficulties in putting together a reasonable pricing strategy.

The market was also complicated at the time of the issuing. The ECU Eurobond market was in a process of being reshaped, and it had significant integration difficulties, with different volatile markets affecting the overall perspective of things and making marketing entirely more difficult in this environment.

Another marketing challenge is that the European Bank is a new bank, so the market remains skeptical until it has proven that it can be a functional financial entity. For the moment,...

Investors want to see some sort of profit at the end of the road and this profit remains unclear for this investment.
Finally, in 1991, likely there wasn't the skepticism we see today towards the EU, but still investors had difficulties in investing in a currency that only existed virtually, such as the Euro. As a consequence, a challenge for the marketing team was that it had to overcome this and promote the issue as a successful currency issue.

2) The European Bank should use a two-step strategy. In the first phase, it should issue in ECU and in the second phase, it should issue in U.S. dollars. It could use either Paribas or Deutsche Bank for the ECU emission and Meryl Lynch, as the largest underwriter in the world, for the USD launch. The advantages of this approach would be that the European Bank would raise more money, in…