Euro debt fund halts Irish aid operation over market jitters

Thursday, 3 November 2011 00:00 - - {{hitsCtrl.values.hits}}

BRUSSELS (AFP):The eurozone’s bailout fund decided on Wednesday to suspend its next fundraising operation for Ireland owing to jitters in the financial markets.

The three-billion-euro ($4.1 billion) operation “has been put on hold,” the spokesman of the European Financial Stability Facility (EFSF) Christof Roche told AFP, citing the ‘deterioration of market conditions.’ “We will conduct this operation in the near future but no longer this week,” Roche added.

The EFSF has the power to raise funds in the financial markets in order to provide loans to bailed out nations, with lower interest rates than they would get on their own.

But a decision by Greek Prime Minister George Papandreou to call a referendum on a debt rescue offerd by the eurozone has unnerved financial markets.

Banking sources said the EFSF may issue bonds for Ireland next week, following a G20 summit and a vote of confidence Papandreou will face in parliament on Friday.

The EFSF has raised funds for Ireland and Portugal as part of their bailout packages.

The bailout mechanism was created in May 2010 to contain the eurozone debt crisis after the EU and IMF decided to provide Greece 110 billion euros in aid loans.

Last November, Ireland was forced to seek an 85-billion-euro ($119 billion) rescue package from the European Union and the International Monetary Fund to deal with massive debt and deficit problems.

The EFSF this week announced the appointment of Barclays, Credit Agricole CIB and JP Morgan as joint lead managers for the next 10-year benchmark issue for Ireland.

EFSF made its inaugural issue in January this year when it placed a five-billion 5-year benchmark bond in support of Ireland.

It has placed two subsequent benchmark bonds in support of the financial assistance programme for Portugal, which was given a 78-billion-euro bailout in May.