28/11/2012
EFSF borrows EUR7bn for one year
The European Financial Stability Facility (EFSF) on 27 November placed a EUR7 billion one-year benchmark bond maturing on 3 December 2013, at an average rate of 0.22%. Earlier in the day, the EFSF expressed an intention to issue one-year bonds “in the near future” to resolve its temporary inability to make use of mid- and long-term issues since the credit rating of France was downgraded by Moody’s. “This inaugural one-year bond from EFSF was met with exceptionally strong demand with close to EUR9 billion in orders received from investors around the world,” the fund says in a statement. The EFSF had been planning to issue three-year bonds last week, but was obliged to call off the plans at the last minute due to the ratings downgrade for France the evening before by the ratings agency Moody’s, from Aaa to Aa1. The FESF rating depends on the ratings of the euro zone member states which guarantee its lending. The rating for these guarantor states has to be equal to or higher than its own long-term rating, from each ratings agency, and hence the temporary inability caused by Moody’s ratings downgrade of France. Christophe Frankel, CFO and Deputy CEO of EFSF stated “Today’s one-year bond has allowed us not only to complete the remaining EUR3.6 billion from this year’s funding programme but also to gain a head start for 2013”.
