Friday 23 February 2018

Strong demand as EFSF sells €5bn of 10-year bonds


Donal O'Donovan

THE European Financial Stability Facility (EFSF) has sold €5bn of 10-year bonds at a yield, or interest rate, of 3.49pc. It's up from the 3pc the rescue fund paid to borrow in January.

The cash raised from the bond deal will go to Portugal, but every change to the price of the rescue funds' cost of borrowing is closely watched in Ireland. The price Ireland pays to borrow from the EFSF is set by adding 3pc to the price the EFSF pays to raise cash. The EFSF was set up last year as a bailout vehicle. Last night's deal was the second time it had raised cash in the market.

In a statement, the EFSF said there was strong interest in the new bond, with an order book in excess of €8bn from nearly 100 investors. Demand is reported to be particular strong from Asia with Japan buying €1.1bn.

Demand is far below the monster investor interest seen last January when the EFSF did its first bond deal. At that time, orders were placed for €40bn of bonds, even though the fund only sold €5bn.

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