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European Financial Stabilisation Mechanism

The European Financial Stabilisation Mechanism (EFSM) is an emergency funding programme reliant upon funds raised on the financial markets and guaranteed by the European Commission using the budget of the European Union as collateral. It runs under the supervision of the Commission and aims at preserving financial stability in Europe by providing financial assistance to member states of the European Union in economic difficulty.

The Commission fund, backed by all 27 European Union member states, has the authority to raise up to €60 billion. The EFSM is rated AAA by Fitch, Moody's and Standard & Poor's. The EFSM has been operational since 10 May 2010.The Monetary Policy of the ecb 2011, p. 17, (print) (online) http://www.ecb.int/pub/html/index.en.html

Programmes

Irish programme

Under the programme agreed between the Eurozone and the government of Ireland, the EFSM wil provide loans of 22.4 billion euros between 2010 and 2013. As of January 2012 the EFSM had provided 15.4 bn. Further funds have also been provided through the EFSF

Portuguese programme

Under the financial assistance programme agreed between the Eurozone and the government of Portugal, the EFSM provided loans of €24.3 billion to Portugal between 2011 and 2014. Further funds have also been provided through the EFSF and by the International Monetary Fund (IMF).

Greece

In July 2015 the European Commission proposed to re-activate the EFSM to provide financing for a bridging loan to the government of Greece, in order to meet its immediate commitments including loan repayments to the IMF and ECB. In August, the loan of around €7 billion was fully repaid by Greece.

Operations

2011 inaugural issuance

On 5 January 2011, the European Union, under the European Financial Stabilization Mechanism, successfully placed in the capital markets a €5 billion issue of bonds as part of the financial support package agreed for Ireland. The issuance spread was fixed at mid swap plus 12 basis points. This implies borrowing costs for EFSM of 2.59%.

Subsequent issuances

  • €4.75 bn 10 yr bond issued on 24 May 2011
  • €4.75 bn 5 yr bond issued on 25 May 2011
  • €5.0 bn 10yr bond issued on 14 Sept. 2011
  • €4.0 bn 15yr bond issued on 22 Sept. 2011
  • €1.1 bn 7yr bond issued on 29 Sept. 2011
  • €3.0 bn 30 yr bond issued on 9 Jan. 2012

Bailout programs for EU members (since 2008)

Repayments

Portugal

The Portuguese government repaid early €2 billion of its EFSM loans in 2022 and 2023. Another early repayment amounting to €2.5 billion took place on 23 December 2025 : following this repayment, €19.8 billion of EFSM loans to Portugal remain outstanding.

References

de:Europäischer Stabilisierungsmechanismus

References

  1. (6 January 2011). "EU bonds for Ireland bailout well-received on market".
  2. (5 January 2011). "AFP: First EU bond for Ireland attracts strong demand: HSBC".
  3. Bartha, Emese. (5 January 2011). "A Mixed Day for European Debt". The Wall Street Journal.
  4. "News and Insights".
  5. Robinson, Frances. (21 December 2010). "EU's Bailout Bond Three Times Oversubscribed". The Wall Street Journal.
  6. "The EU as a borrower – investor relations".
  7. (15 July 2015). "EU's Dombrovskis: EFSM is best option for short-term Greek financing". Reuters.
  8. (1 July 2016). "European Financial Stabilisation Mechanism (EFSM)". European Commission.
  9. "EFSF places inaugural benchmark issue". Europa (web portal).
  10. "il bond è stato piazzato al tasso del 2,59%". Movisol.org.
  11. "Portugal makes early €2.5 billion repayment to the European Financial Stabilisation Mechanism".
Info: Wikipedia Source

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