EU to Sell as Many as Eight Bonds for Ireland in 2011

Europe’s financial aid funds for distressed governments will sell bonds to raise as much as 34.1 billion euros ($45 billion) for Ireland in 2011 and 14.9 billion euros in 2012, the European Commission said.

The two funds -- the European Financial Stabilization Mechanism and European Financial Stability Facility -- will sell a total of seven to eight benchmark bonds each worth 3 billion euros to 5 billion euros in 2011, the commission said in a statement in Brussels today.

The fundraising schedule “will ensure smooth market operations over the entire duration of the support program,” the commission said. The European Union “will however carefully analyze the markets after they reopen in the New Year and may adapt funding plans accordingly.”

The two funds form the kernel of the 750 billion-euro financial backstop that European finance ministers set up in May to prevent the spreading sovereign-debt crisis from undermining the euro. Both funds enjoy AAA rating.

Bonds will be sold mainly at maturities of five, seven and 10 years, possibly supplemented by “smaller bond issues” either through taps or “targeted transactions,” the commission said.
Ireland’s 85 billion-euro rescue last month includes 22.5 billion euros from the EFSM -- which is managed by the commission -- and 17.7 billion euros from the EFSF, overseen by euro-area governments.

The Luxembourg-based EFSF sells bonds backed by 440 billion euros in national guarantees and uses the money it raises to make loans to debt-swamped euro-area countries. It sells debt only after an aid request. So far the only country to tap the fund is Ireland, whose package also includes loans from the U.K., Sweden, Denmark and the International Monetary Fund.

Greece’s earlier 110 billion-euro rescue involved loans from euro-area governments and the IMF.

To contact the reporters on this story: James G. Neuger in Brussels at jneuger@bloomberg.net; Jonathan Stearns in Brussels at jstearns2@bloomberg.net.