EFSF sells 5 bn euros in bonds to help Ireland

25th January 2011, Comments 0 comments

The European Financial Stability Facility has sold five-year bonds worth five billion euros ($9.2 billion) in a landmark issue to help raise funds for Ireland, an EFSF statement said Tuesday.

Demand for the first bond issue by the facility, which was established in June to help heavily-indebted eurozone members, was overwhelming, with bids for almost nine times as much as was on offer, it said.

"I am delighted with the outcome of our inaugural issue," said EFSF director Klaus Regling.

"The huge investor interest confirms confidence in the strategy adopted to restore financial stability in the euro area," he told a press briefing in Frankfurt.

Dutch-based ING analyst Padhraic Garvey said that investors were "falling over themselves to get their hands on the EFSF bond," since it can be used as collateral by banks that wish to borrow cash from the European Central Bank.

It has been suggested that the facility could also eventually buy eurozone government bonds on secondary markets or lend governments the funds to buy back their own bonds at cheaper prices, thus reducing their debt burdens.

However, EU heavyweights France and Germany may oppose launching such joint eurozone bonds as a solution to the debt crisis as it could increase their own borrowing costs if they are seen to be exposed to the debt of their weaker eurozone partners.

© 2011 AFP

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