The EU and the EFSF have revised their issuance calendars – previously established on the basis of the Irish programme only - to include financial support to Portugal. The calendars are closely coordinated to ensure smooth market operations over the entire duration of the support programmes.
Following the formal request for financial assistance made on 7 April 2011 by the Portuguese authorities, the terms and conditions of the financial assistance package were agreed by the Eurogroup and the EU's Council of Economics and Finance Ministers on 17 May. The financial package will cover Portugal’s financing needs of up to €78 bn. The European Union (EU), through the use of the European Financial Stabilisation Mechanism (EFSM), and the European Financial Stability Facility (EFSF), will both provide up to €26 bn each, to be disbursed over 3 years. Further support will be made available through the International Monetary Fund (IMF) for up to €26 bn.
Various borrowing operations by EFSM and EFSF will take place between 23 May and 15 July to cover first disbursements to Portugal and Ireland for a total of €15.3 bn. Complementary disbursements are foreseen by the IMF as agreed in the respective EU/IMF programmes.
Issues for both EU and EFSF under the programmes for Portugal and Ireland should be mainly in standard benchmark maturities of 5 to 10 years denominated in euros. Disbursements envisaged over the rest of the year will be subject to Portugal’s and Ireland's requirements, and to quarterly reviews by the Commission in cooperation with the IMF and in liaison with the European Central Bank (ECB).
The EU, through the use of the EFSM and the Balance of Payments (BoP), has already funded €9.6 bn in the first quarter of 2011. In addition to two benchmark bonds the EU intends to launch in the second quarter, the EU plans to launch two further benchmark bonds in 2011, aiming at €3 to €5 bn for each transaction. The EU's first two benchmark bonds were placed in January and March. The EU may complement its funding needs by smaller bond issues, either through taps of syndicated issues launched under the EFSM or targeted transactions.
EFSF in 2011 has already funded €5 bn in the first quarter. In addition to two benchmark bonds that it intends to launch in the second quarter, it plans, also subject to revision and market conditions, to launch a further four benchmark bonds in 2011, aiming at €3 to 5 billion for each transaction. In 2012, EFSF intends to raise up to €13 bn. EFSF may complement its funding needs by smaller bond issues, either through taps or through targeted transactions. Syndications, auctions and private placements may be used.
The EU and EFSF are rated triple A by the three major rating agencies, Fitch, Moody's and Standard & Poor's. Issuances by the EU are executed by the European Commission's financial operations department located in Luxemburg. Issuances by the EFSF will be executed in close cooperation with the German Debt Management Office (Finanzagentur).
Press release
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