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EFSF euro rescue fund plans debut bond next week

Source: Reuters - Mon 17th Jan 2011

The European Financial Stability Fund (EFSF), the euro zone's sovereign bailout fund, said on Monday it had appointed lead managers for its first bond sale, expected next week.

Citibank, HSBC and Societe Generale will lead manage the transaction, expected to be a five-year bond sized at between 3 billion and 5 billion euros.

The benchmark issue is part of the financial assistance programme for Ireland, the EFSF said in a statement.

"Over 2011 and 2012 EFSF will raise up to 26.5 billion euros in the capital markets as part of the Irish support programme, which will include two further benchmark bonds of 3-5 billion euros per transaction in the current year," it said.

EFSF is rated triple A by the three major rating agencies, Fitch, Moody's and Standard & Poor's.

"The first EFSF issue is an important transaction for markets and for the euro zone," the fund's CEO Klaus Regling said in the statement.

"I am confident that the strong position of these highly regarded global institutions in the market will ensure the success of our first issue, helping to restore stability to the sovereign bond markets and protect the euro."

Based in Luxembourg, the EFSF was introduced last year by the European Union to provide a financial safety net for euro zone countries in economic strife.

Euro zone finance ministers will discuss an increase to the fund's effective lending capacity on Monday, though France said it would be March before a firm plan was in place.

A Reuters poll of analysts published on Monday said the EFSF would need to be increased from its current 440 billion euros in order to meet potential claims upon it, with the median figure suggesting a boost to 700 billion.

Markets expect Portugal and possibly Spain to eventually need an European Union-led bailout similar to those handed out to Ireland and Greece last year.

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