(MENAFN - AFP) The EU's bailout fund on Tuesday hailed what it termed "exceptionally strong demand" as it raised seven billion euros (9 billion) in one-year debt.
The first ever one-year offering from the European Financial Stability Facility (EFSF) "was met with exceptionally strong demand with close to nine billion euros in orders received from investors around the world," it said.
The bonds were sold with an average yield of 0.22 percent, meaning investors were prepared to accept very low returns for the relative safety of parking their cash with the EFSF fund.
"Today's one-year bond has allowed us not only to complete the remaining 3.6 billion euros from this year's funding programme but also to gain a headstart for 2013," said the fund's chief financial officer, Christophe Frankel.
Last week, the EFSF was compelled to postpone a planned auction of three-year bonds after Moody's downgraded France by one notch from its top rating.
The move meant that EFSF's new long-term issuance -- currently rated Aaa by Moody's -- no longer satisfied the necessary criteria for selling debt, the agency explained.
Long-term bond issues of the EFSF, the bailout fund set up to assist struggling eurozone countries such as Greece or Ireland, have to be fully backed by countries that enjoy a similar rating to its own top rating.
France has dropped out of that exclusive club -- which now includes only Finland, the Netherlands, Germany and Luxembourg -- so the fund does not have sufficient guarantees to issue long-term debt.
The fund said it would issue one-year bonds until the situation had been resolved.