Bloomberg News

EFSF Bailout Bonds Drop After S&P Puts Fund on Negative Watch

December 06, 2011

Dec. 6 (Bloomberg) -- Bonds issued by Europe’s bailout fund fell after Standard & Poor’s said the European Financial Stability Facility may lose its top credit rating.

The EFSF’s 2.75 percent bonds due July 2016 fell 0.29 cents on the euro to 101.27, the first decline since Nov. 25 based on closing prices, according to Bloomberg Bond Trader data at 2:20 p.m. in London. The fund’s 2.75 percent December 2016 notes dropped 0.33 cents to 100.81, and its securities due 2021 fell.

EFSF’s AAA rated bonds are on “CreditWatch negative” after S&P put 15 euro-region nations that guarantee the bailout fund on review for downgrade, citing “systemic stresses.” Six countries in the euro zone still carry the top ratings from S&P including Germany, France, Austria, Finland, Luxembourg and the Netherlands.

“Based on EFSF’s current structure, were we to lower one or more of the current AAA ratings on EFSF’s guarantor members, all else being equal, we would lower the issuer and issue ratings on EFSF to the lowest sovereign rating on members currently rated AAA,” S&P said in a statement today.

The EFSF has raised 16 billion euros ($21 billion) from four bonds this year, according to data compiled by Bloomberg. The fund’s 3.375 percent notes due 2021 lost 0.20 cents to 97.71. Its 3.5 percent securities due 2022 rose 0.32 cents to 98.54.

--Editors: Andrew Reierson, Paul Armstrong

To contact the reporters on this story: Ben Martin in London at

To contact the editor responsible for this story: Paul Armstrong at

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