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NewsletterN2 July 2011
Europe has often faced criticism of moving too slow.
In reaction to the debt crisis, many economists predict-
ed that the euro area would break apart. This will not
happen.
Europe has put a new financial market supervisory
structure in place. It has significantly improved its eco-
nomic governance and surveillance with the European
Semester and the Euro Plus Pact. It is about to finalise
new rules to strengthen the Stability and Growth Pact
and to tackle imbalances within the monetary union
more systematically.
Furthermore, it has closed a structural gap by setting upa
permanent crisis resolution mechanism, modelled on
the principles of the IMF, in order to provide financial
assistance under strict conditionality to euro area
Member States experiencing financial difficulties.
All euro area Member States are introducing ambitious
fiscal consolidation programmes and countries like
Greece, Ireland and Portugal have adopted significant
structural reforms.
Europe has reacted decisively to existing deficiencies
by establishing the new system of crisis prevention and
crisis resolution in lit tle more than a year.
This is a clear message: Europe will
defend the monetary union and the
euro with all its means.
Europe moves ahead with crisis resolutionThe 17 euro area Member
States have signed the amended framework
agreement for the EFSF and also the treaty for the creation of
the
permanent crisis mechanism, the European Stability Mechanism
(ESM).
The changes and timeframe are outlined below.
Original EFSF
Structure: Company under Luxembourg law
Guarantee commitments: 440 billion
Activity: provides loans to euro area Member States
Credit enhancements:
120% overguarantee
Cash reserve
Loan specific cash buffer
Amended EFSF
Structure: Company under Luxembourg law
Guarantee commitments: ~780 billion
Activit y: provides loans to euro area Member States and may
exceptionally intervene in debt primary market
Credit enhancement:
Up to 165% overguarantee
ESM
Structure: Intergovernmental institution
Total subscribed capital: 700 billion (80 billion in paid-in
capital and
620 in callable capital)
Activity: provides loans to euro area Member States and may
excep-
tionally intervene in debt primary marketKlaus Regling
EFSF Chief Executive Officer
*Transfer to Amended EFSF depends upon na tional ratificat ion
procedures and therefor e the timeline may change
EFSF/ESM timeframe
30 June/
1July 2013
EFSF
created
Original
EFSF
June2010
Dec2010
July2011
Expected end
2011*
Before Dec
2012/1Jan 2013
Amended
EFSF
Initial agreementto amend EFSF
Signing ofamendedEFSF
After ratification bynational parliaments,amended EFSF willenter
into force
EFSF ceases toenter new
programmes
Once outstandingdebt is repaid EFSF
to close down
ESMInitial agreement
to set up ESMSigning ofESM
ESM Treatyratified byparliaments
ESM in placeESM can providefinancial assistance
This document is for information purposes only. Information
contained in this document is checked and provided by the European
Financial Stability Facility (EFSF) with due diligence. This
not-
withstanding, the information provided may become subject to
changes. EFSF does not assume any liability or guarantee for the
accuracy and completeness of this document. This document
does not constitute an of fer nor an invitation to acquire or
dispose of any debt or other securities of EFSF.
For further information, www.efsf.europa.eu
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Two issues in support of PortugalFollowing the request made by
Portugal, a financial assistance programme of 78 billion was agreed
on 17 May. The programme will be
financed by 26 billion each from the IMF, EU (via the EFSM) and
the EFSF.
In June, EFSF placed two issues as part of the programme for
Portugal
Further EFSF issues for 2011For the second half of 2011, subject
to revision and
market conditions, EFSF should place a further
4 benchmark bonds
all issues aiming at 3-5 billion per transaction
through syndications, auctions and private
placements
denominated in euro or other major currency
in support of both Portugal and Ireland
This document is for information purposes only. Information
contained in this document is checked and provided by the European
Financial Stability Facility (EFSF) with due diligence. This
not-
withstanding, the information provided may become subject to
changes. EFSF does not assume any liability or guarantee for the
accuracy and completeness of this document. This document
does not constitute an of fer nor an invitation to acquire or
dispose of any debt or other securities of EFSF.
For further information, www.efsf.europa.eu
NewsletterN2 July 2011
Issue date 15 June 2011
Amount placed 5 billion
Maturity 10 years (05/07/2021)
Coupon 3.375%
Initial pricing mid swap +17bp
Reoffer yield 3.493%
Reofferprice 99.013%
Settlement date 22 June 2011
BookrunnersBarclays, Deutsche
Bank, HSBC
Issue date 22 June 2011
Amount placed 3 billion
Maturity 5 years (05/12/2016)
Coupon 2.750%
Initial pricing mid swap +6bp
Reoffer yield 2.825%
Reoffer price 99.636%
Settlement date 29 June 2011
BookrunnersBNP Paribas, Goldman
Sachs, RBS
Geographical breakdown
NorthAmerica
1%
Insurance/Pension funds
10%
CentralBank/Govt/
Sov wealthfund 37%
CentralBank/Govt/
Sov wealthfund 54%
Banks25%
Fund managers 28%
Asia-Japan21%
Asia-exJapan19%
Asia-exJapan24%
Eurozone43%
Rest ofEurope
4%
Breakdown by investor type
Geographical breakdown
MiddleEast
4% Asia-Japan22%
NorthAmerica
4%UK5%
UK12%
Rest ofEurope
8%
Eurozone33%
Breakdown by investor type
Others
3%
Banks25%
Fundmanagers
18%
During our continuous meetings and conference calls with
investors fromaround the world, we have received very positive
feedback and almost 500 investors have already
bought EFSF bonds.
Despite difficult and volatile market conditions, the
success of the first 3 issues shows that the EFSF is
already widely-recognised as a quality name within
the SSA sector
Christophe Frankel
CFO and Deputy CEO of EFSF
To contact us Christof Roche
Chief Press Officer
Tel: +352 260 962 25
Email: [email protected]
Christophe Frankel
CFO and Deputy CEO
Tel: +352 260 962 20
Email: [email protected]
Rolf Strauch
Director of Research and Institutional Relations
Tel: +352 260 962 21
Email: [email protected]
