Strong demand for EU bailout fund bonds

The EU’s bailout fund, the EFSF, enjoyed strong demand yesterday at an auction of six-month debt, Germany’s central bank said.

The Bundesbank, which organised the auction, said it received €6.208 billion worth of bids for €1.99 billion of six-month bonds, at an average yield of 0.1908 per cent.

The bid-cover ratio, closely watched by the markets, was 3.1, meaning the auction was oversubscribed by that amount.

Last month, the Standard and Poor’s ratings agency downgraded the EFSF by one notch to AA+ but said it would restore its top AAA ranking if the fund obtains additional guarantees.

The decision was the result of downgrades to France’s and Austria’s ratings from AAA since they served as top-level guarantors of the fund, S&P said at the time.