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The European Financial Stability Facility (EFSF) was created as a temporary crisis resolution mechanism by the euro area Member States in June 2010. The EFSF has provided financial assistance to Ireland, Portugal and Greece. The assistance was financed by the EFSF through the issuance of EFSF bonds and other debt instruments on capital markets.

The EFSF applies a diversified funding strategy, which entails the use of a variety of instruments and maturities to ensure the efficiency of funding and continuous market access. One feature of this strategy is that funds raised through various instruments are not attributed to a particular country. The funds are pooled and then disbursed to programme countries.

On 13 April 2016, ESM priced an 8-year bond raising €3 billion.

The EFSF can issue across the yield curve up to the maturity of its last outstanding loan which will be in 2070. The EFSF can issue through the following methods: syndications and auctions, either for new lines or the reopening of existing bonds.

As part of its communication strategy, the EFSF announces its annual funding target and also the amounts to be raised each quarter.

The EFSF scheduled funding target for 2022 is €19.5 billion.

The EFSF was created as a 3-year temporary organisation in June 2010. As of July 2013, the EFSF will no longer provide any financial assistance to euro area Member States. Any programmes from this date are covered by the permanent rescue mechanism, the ESM.

However, due to its diversified funding strategy, the loans made to programme countries do not match the bonds issued. The EFSF will need to roll over existing debt for many years to come and will therefore continue to be an active bond issuer.

This discussion paper analyses the trade-offs involved in reforming the regulatory treatment of sovereign exposures in European banks.

ESM Debt Issuance Programme

ESM Euro-Commercial Paper Programme

This paper studies the drivers of sovereign ratings for euro area countries and finds that judgement is applied to varying degrees, and thus recommends that rating agencies increase their methodological transparency.

Authors: Rudolf Alvise Lennkh and Antonello D'Agostino

Abstract: