Brussels, 02/11/2011 (Agence Europe) - On Wednesday 2 November, the European Financial Stability Fund (EFSF) announced that it was suspending plans to issue bonds aiming to raise €3 billion to fund loans pledged to Ireland, due to the tense situation on the markets. “The long-scheduled issuance of €3 billion for Ireland has been delayed. We intend to carry out the issuance in the near future, but not this week”, said a spokesperson for the EFSF. The Fund wishes in any case to wait for a minimum level of calm to return to the bond market.
This latest issuance (the fourth since the Fund was set up) will be used to fund part of the aid to Ireland which, like Greece and Portugal, is the beneficiary of an international rescue programme.
The Fund carried out its first bond issuance in January 2011, to the tune of €5bn in bonds to finance aid to Ireland. Two operations to help Portugal followed in June. In total, the EFSF is to fund €17.7bn of eurozone loans for Ireland, with the rest coming from the whole European Union and the International Monetary Fund.
The EFSF has an effective loan capacity of €440bn, but in reality, it has just €250bn still available to it, due to commitments already made. Its firepower should rise to €1 trillion, due to a leverage effect. Its toolbox has also just been expanded. In the future, it will be able to support fragile countries by buying public debt on the secondary market, instead of the European Central Bank, or by exchanging debt instruments in circulation between investors. It will also be able to help states or banks preventively, outside of the weighty adjustment programme negotiated with the eurozone and the IMF. (LC/transl.fl)