Sovereign debt: EU bailout bonds set for debut issue
Success crucial for sovereign debt markets; Strong investor demand expected
A burgeoning new sub-asset class in the sovereign debt markets will set the tone for European debt markets in 2011 after a tumultuous 2010. And it is acronym rich: the European Financial Stability Mechanism (EFSM), a European Union funding vehicle, kicked off proceedings in early January when it raised €5 billion from the sale of five-year bonds. The European Financial Stability Facility (EFSF) is set to follow with an inaugural €5 billion issue this month.
Amount the EFSF and EFSM hope to raise in 2011
The funds will be used to finance about half of the €85 billion November bailout of Ireland, and will also be used to provide most of the €750 billion backstop that was put in place when the EFSF was established last May.