EU raises €5 bn in bonds to rescue Ireland; Asia buys one-fifth
07 Jan 2011
On behalf of the 27-nation European Union (EU) the European Commission sold bonds worth €5 billion as the first part of its €45-billion commitment to rescue the Irish economy, which is struggling to recover from a severe sovereign debt crisis.
Last month, the EU along with the International Monetary Fund (IMF) agreed to an €85-billion bailout of the debt-struck Celtic nation to shore up its banking system and restore the nation's public finances. (See: Ireland succumbs to EU, IMF on €85-bn bailout)
The EU's European Financial Stabilisation Mechanism (EFSM) and European Financial Stability Facility (EFSF), and bilateral loans accounted for around €45 billion of the total funding, while the IMF agreed to contribute €22.5 billion with the remaining €17.5 billion coming from Ireland's own cash reserves and liquid assets.
The five-year bonds issued under the EFSM received a very strong investor response, resulting in an oversubscription of over three times in less than one hour. The EU bonds carry the highest 'AAA' ratings by global rating agencies.
''Investor demand came from around the world and from all types of investors. This is a sign of confidence in the euro area and recognition of the EU as a prime issuer,'' an EU statement said.
Asian buyers accounted for 21.5 per cent of the total issue, Europe 71.5 per cent with the UK taking 16.5 per cent, and the America's 6 per cent, Bloomberg reported quoting an EC email.
