1 Disclaimer IMPORTANT: YOU ARE ADVISED TO READ THE FOLLOWING CAREFULLY BEFORE READING, ACCESSING OR MAKING ANY OTHER USE OF THE MATERIALS THAT FOLLOW. This presentation (the Presentation) has been prepared by and is the sole responsibility of the European Financial Stability Facility ("EFSF"), and has not been verified, approved or endorsed by any lead auditor, manager, bookrunner or underwriter retained by EFSF. The Presentation is provided for information purposes only and does not constitute, or form part of, any offer or invitation to underwrite, subscribe for or otherwise acquire or dispose of, or any solicitation of any offer to underwrite, subscribe for or otherwise acquire or dispose of, any debt or other securities of EFSF (Securities) and is not intended to provide the basis for any credit or any other third party evaluation of Securities. If any such offer or invitation is made, it will be done so pursuant to separate and distinct offering materials (the "Offering Materials") and any decision to purchase or subscribe for any Securities pursuant to such offer or invitation should be made solely on the basis of such Offering Materials and not on the basis of the Presentation. The Presentation should not be considered as a recommendation that any investor should subscribe for or purchase any Securities. Any person who subsequently acquires Securities must rely solely on the final Offering Materials published by EFSF in connection with such Securities, on the basis of which alone purchases of or subscription for such Securities should be made. In particular, investors should pay special attention to any sections of the final Offering Materials describing any risk factors. The merits or suitability of any Securities or any transaction described in the Presentation to a particular persons situation should be independently determined by such person. Any such determination should involve, inter alia, an assessment of the legal, tax, accounting, regulatory, financial, credit and other related aspects of the Securities or such transaction. The Presentation may contain projections and forward-looking statements. Any such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause EFSFs actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Any such forward-looking statements will be based on numerous assumptions regarding EFSFs present and future strategies and the environment in which the EFSF will operate in the future. Further, any forward-looking statements will be based upon assumptions of future events which may not prove to be accurate. Any such forward-looking statements in the Presentation will speak only as at the date of the Presentation and EFSF assumes no obligation to update or provide any additional information in relation to such forward-looking statements. The Presentation must not be reproduced, redistributed or passed on to any other person or published, in whole or in part, for any purpose without the prior written consent of EFSF. The Presentation is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. European Financial Stability Facility ("EFSF"), a socit anonyme incorporated in Luxembourg, with its registered office at 43 Avenue John F. Kennedy, L-1855 Luxembourg (R.C.S. Luxembourg: B 153.414). 2 Determined and coordinated action to safeguard financial stability 12 April 110 billion for Greece ( 80 billion EAMS, 30 billion IMF) 10 May 750 billion for European support package to secure stability within the Euro Area 7 June As part of this package, The European Financial Stability Facility (EFSF) was created 28 November Agreement of financial assistance programme for Ireland (85 billion) 25 January EFSF inaugural issue as part of programme for Ireland 17 May Agreement of financial assistance programme for Portugal (78 billion) 15 June EFSFs first issue in support of programme for Portugal 20 June Agreement by euro zone and EU finance ministers to increase EFSF effective capacity, widen scope of mandate and finalise terms of permanent stability mechanism, European Stability Mechanism (ESM) 21 July Euro zone summit, second support package for Greece and increased scope for EFSF/ESM 18 October Amended EFSF enters into force 29 November Maximising EFSFs firepower approved 9 December EU summit ESM brought forward to July 2012, EFSF will continue as scheduled until end June 2013 13 December EFSFs holds first bill auction 14 March Second Greek programme formally approved by Euro Working Group 30 March Eurogroup decides on EFSF/ESM to run parallel 26 April EFSF holds first tap 15 May EFSF holds first tap via auction 25 June Cyprus makes official request for financial assistance 20 July Eurogroup grants financial assistance to Spains banking sector
2010 2011 2012 3 A comprehensive strategy at European level Reinforcing the Stability and Growth Pact Automatic consequences if 3% deficit ceiling is breached Possible sanctions in corrective and preventive arm New Fiscal Compact Annual structural public deficit shall not exceed 0.5% of nominal GDP Rule introduced in national legal systems at constitutional (or equivalent level) New Excessive Imbalances Procedure Multilateral surveillance to tackle imbalances early, sanctions possible European Semester to avoid negative spill-over effects Euro-Plus-Pact National measures to foster competitiveness Comprehensive regulatory reform agenda for financial markets Implementation of Basel III Regulation of Rating Agencies New European Institutions Three new supervisory authorities EBA, EIOPA, ESMA oversee banking, insurance & securities markets A European Systemic Risk Board (ESRB) to monitor macroprudential risks More efficient decision-making process Reinforcing the Eurogroup Creation of Euro Area Summit A robust framework for crisis management EFSM, EFSF and ESM (and IMF)
3 The strategy is delivering results - fiscal Source: European Commission, European Economic Forecast Spring 2012 Fiscal balance, Euro area vs USA and Japan (as % of GDP) Fiscal balance, euro area Member States (as % of GDP) * * Actual figure for Ireland 2010 -31.2% 4 The strategy is delivering results - competitiveness Divergences within EMU are declining Competitiveness is improving in all Southern European countries Current Account Balance (as % of GDP) Source: Eurostat, EC European Economic Forecast Spring 2012
Nominal unit labour costs, whole economy (2000=100) 5 6 2 European Financial Stability Facility 7 EFSF: mission and scope of activity Scope of activity, linked to appropriate conditionality Provide loans to euro area Member States in financial difficulties Intervene in the debt primary market Intervene in the secondary bond markets Act on the basis of a precautionary programme Finance recapitalisation of financial institutions through loans to governments including in non programme countries To fulfil its mission, EFSF issues bonds or other debt instruments on the capital markets Mission : to safeguard financial stability in Europe by providing financial assistance to euro area Member States In case a country steps out, contribution keys would be readjusted among remaining guarantors and the guarantee committee amount would decrease accordingly. Effective lending capacity is 440 billion which corresponds to the guarantee commitments of triple A member states. 8 Member States Credit rating (S&P/Moodys/Fitch) New EFSF maximum guarantee Commitments (m) New EFSF contribution key (%) New EFSF maximum guarantee commitments (PT, GR, IE stepped out) New EFSF contribution key in % (PT, GR, IE stepped out) Austria (AA+/Aaa/AAA) 21,639.19 2.78 21,639.19 2.99 Belgium (AA/Aa3/AA) 27,031.99 3.47 27,031.99 3.72 Cyprus (BB/Ba3/BB+) 1,525.68 0.20 1,525.68 0.21 Estonia (AA-/A1/A+) 1,994.86 0.26 1,994.86 0.27 Finland (AAA/Aaa/AAA) 13,974.03 1.79 13,974.03 1.92 France (AA+/Aaa/AAA) 158,487.53 20.31 158,487.53 21.83 Germany (AAA/Aaa/AAA 211,045.90 27.06 211,045.90 29.07 Greece (CCC/C/CCC) 21,897.74 2.81 0.00 0.00 Ireland (BBB+/Ba1/BBB+) 12,378.15 1.59 0.00 0.00 Italy (BBB+/Baa2/A-) 139,267.81 17.86 139,267.81 19.18 Luxembourg (AAA/Aaa/AAA) 1,946.94 0.25 1,946.94 0.27 Malta (A-/A3/A+) 704.33 0.09 704.33 0.10 Netherlands (AAA/Aaa/AAA) 44,446.32 5.70 44,446.32 6.12 Portugal (BB/Ba3/BB+) 19,507.26 2.50 0.00 0.00 Slovakia (A/A2/A+) 7,727.57 0.99 7,727.57 1.06 Slovenia (A+/Baa2/A) 3,664.30 0.47 3,664.30 0.51 Spain (BBB+/Baa3/BBB) 92,543.56 11.87 92,543.56 12.75 Total 779,783.14 100 726,000.01 100 EFSF shareholder contribution 9 A solid and simple structure In the case of a missed payment by a borrower, EFSF would be in charge of ensuring that each Guarantor remits its share of the shortfall to the EFSF The shortfall would be covered by the: 1. Guarantees 2. Grossing up of guarantees (up to 165% over- collateralisation) If a payment is missed by a borrower, the country programme could be interrupted and subsequently reviewed and the MoU renegotiated but the conditionality would still exist All guarantors rank equally and pari passu amongst themselves
Up to 165% overguarantee Interest P r i n c i p a l
+
I n t e r e s t
Credit enhancement structure Credit enhancement of up to 165% over-guarantee to cover payments in case of any payment default from a borrower. The guarantees cover both principal and interest.
100% Over collateral -isation 10 EFSF: high quality credit rating The high credit ratings reflect: Strong shareholder support Credit enhancement An organisation supported by the best expertise Conservative strategy of funding and investment EFSF bonds are eligible as ECB collateral
AA+
Aaa Negative
AAA Stable
A-1+
P-1
F1+ Long term Short term 11 EFSF: a lean organisation Board of Directors
CEO Klaus Regling + about 60 staff covering: Operations: Funding strategy Lending Risk management Research Legal Communication Corporate governance, Audit, accounting & admin
ECB (agent for primary & secondary bond market purchases)
European Financial Stability Facility Shareholders Euro Area Member States Founded 7 June 2010 with Tenure of 3 years - up to June 2013
Based in Luxembourg (socit anonyme under Luxembourgish law)
12 2 How the EFSF works: loan disbursement and funding strategy 13 EFSF: loan request procedure* Application for aid EAMS makes formal request to other members Support programme European Commission negotiates stabilization programme including strong conditionality - in cooperation with the IMF and in liaison with the ECB Approval of loan terms A common Memorandum of Understanding of loan terms is established between the EC, the IMF and beneficiary country and approved by Eurogroup and IMF Board Loan disbursement EFSF finalises technical terms of loan: term, redemption, schedule, interest rate. On defined date, EFSF makes loan available to borrower 3 to 4 weeks * Certain new instruments, such as precautionary credit lines, may have lighter procedures for swift implementation Financial assistance programme for Ireland Objectives of the programme Immediate strengthening and comprehensive overhaul of the banking sector Ambitious fiscal adjustment to restore fiscal sustainability, correction of excessive deficit by 2015 Growth enhancing reforms, in particular on the labour market, to allow a return to a robust and sustainable growth
Financing The total 85 billion of the programme will be financed as follows: 17.5 bn contribution from Ireland (Treasury and NPRF*) 67.5 bn external support 22.5bn from IMF 22.5bn from EFSM 17.7bn from EFSF + bilateral loans from the UK (3.8bn), Denmark (0.4bn) and Sweden (0.6bn)
Disbursements will be made over 3 years with a minimum average loan maturity of 15 years
Ireland IMF EFSM EFSF+bilateral loans * National Pension Reserve Fund
35 billion 50 billion 14 Financial assistance programme for Portugal Objectives of the programme Restore fiscal sustainability through ambitious fiscal adjustment
Enhance growth and competitiveness via reforms and measures, i.e. Freeze govt. sector wages until 2013, reduce pensions over 1500 Reform unemployment benefits and reduce tax deductions Execute an ambitious privatisation programme (TAP, Caixa Seguros )
Improve liquidity and solvency of financial sector Banking support scheme of up to 12 billion to provide necessary capital for banks to bring Tier 1 capital ratios to 10% by end 2012 in case market solutions cannot be found
Financing The total 78 billion of the programme will be financed as follows: 26 billion from IMF 26 billion from the EU (EFSM) 26 billion from EFSF
Disbursements will be made over 3 years with an minimum average loan maturity of 15 years
IMF EU EFSF 15 9.1 5.9 4.5 3 2010 2011 2012 2013 GDP deficit reduction objectives %
o f
G D P
Second financial assistance package for Greece Following the successful completion of the Private Sector Involvement offer by the Greek government, the second assistance package for Greece has been approved. EFSF has made a substantial contribution to the Greek programme but did not have to raise huge amounts in the markets did not have to raise the whole amount of funding immediately
16
PSI Sweetener (29.7 bn) Objective: enable Greece to finance the debt exchange. As part of the debt exchange, bond holders received 1 to 2 year EFSF bonds with a face amount equal to 15% of the face amount of the exchanged bonds.
Accrued Interest (4.8 bn) Objective: enable Greece to pay the accrued interest under Outstanding Greek bonds including in the PSI. Investors have received EFSF 6-month bills to cover interest due under outstanding bonds
Eurosystem Collateral enhancement (35bn) Objective: provide the Eurosystem with collateral enhancement due to Greeces selective default rating To back Greek sovereign bonds provided to the Eurosystem as collateral, Greece provided the Eurosystem with 1 year EFSF bonds. A cashless operation, the EFSF bonds were returned on 25 July 2012 and were subsequently cancelled.
Bank recapitalization (up to 25 billion*) Objective: preserve the financial stability of the Greek banking system EFSF can disburse funds to the Hellenic Financial Stability Fund (HFSF) in order to Recapitalise the Greek banking sector
* 25 billion is the initial amount provided through transfer of EFSF bonds. Total amount could be up to 48 billion, if needed. EFSF will contribute to the second Greek programme for a total amount of up to 109.1 billion until the end of 2014 Recapitalisation of the Spanish financial sector Objectives of the programme Recapitalise the Spanish banking sector and restore market confidence in Spain
Financing Loan covers estimated shortfall in capital requirements (51-62 bn) with additional safety margin summing up to a total of up to 100 bn Loan maturities will be up to 15 years with an average of 12 years To be financed via EFSF and then transferred to ESM (without seniority status)
Conditions Apply to individual financial institutions Reforms targeting the financial sector as a whole, restructuring plans in line with EU state aid rules Reinforcement of regulatory and supervisory framework in Spain
The funding strategy should be described as SSA (Sovereign, Supranational, Agency) type through benchmark issuance, with focus on a high standard of liquidity. This would permit volumes and pricing to be in line with what is expected from the EFSF mission and is in line with the ECB classification Flexibility: a diversified funding strategy using a liquidity buffer as a key component. As part of this strategy, EFSF has established a short-term programme and holds regular bill auctions with maturities from 1 month. Fund pooling: funds raised are not attributed to a particularly country but pooled and then disbursed to programme countries when required. Size/Maturity: EFSF strategy adapts to market conditions in order to meet investors requirements for liquidity Currencies: The EFSF does not have any currency limitation for its funding activities but it is expected that the majority of funds would be raised in euro. The EFSF would in all likelihood need to swap the proceeds back into euro Issuance method: Syndications and auctions, private placements, new lines and tap issues J.P. Morgan JPM Maggie Euro Credit Index iBoxx EUR Sub-sovereigns index Citigroup World Broad investment Grade index Euro Broad Investment Grade index BoA ML Barclays Capital Euro Aggregate index EMU Broad Market index EFSF: included in the main SSA indices 3.03% 5.96% 0.22% 0.81% 0.79% 0.76% Provider Index EFSF weighting* * Weighting at 31/08/2012 20 EFSF inaugural issue : record breaking investor demand On 25 January 2011, EFSF placed its inaugural issue in support of Ireland. Record breaking order book of 44.5 bn Orders received from over 500 investors 21 Breakdown by investor type Geographical breakdown Pension fund 3% Private banks 2% Corporate 1% Hedge fund 1% Central Bank/Govt/Sov wealth fund 44% Insurance 10% Banks 13% Fund managers 26% UK 11% Middle East 2% USA 3% Americas- others 2% Asia-Japan 22% Rest of Europe 9% Eurozone 37% Asia-ex Japan 14% Amount placed 5 billion Maturity 18/07/2016 Coupon 2.75% Initial pricing Mid swap +6bp Reoffer yield 2.892% Reoffer price 99.302% Settlement date 1 February 2011 Lead managers Citi, HSBC, Socit Gnrale Effective lending cost 5.9% Amount transferred to Ireland 3.6 billion EFSF issue no 6 On 19 March 2012, EFSF successfully placed its first 20-year bond Over 4.8 bn orderbook
Breakdown by investor type Geographical breakdown Amount placed 1.5 billion Maturity 20/03/2032 Coupon 3.875% Initial pricing Mid swap + 115 bp Reoffer yield 3.956% Reoffer price 98.894% Settlement date 26 March 2012 Lead managers BNP Paribas, Commerzbank, DZ Bank 22 EFSF places its largest ever bond On 10 July 2012, EFSF placed its largest ever bond, a 6 billion 5-year issue.
Breakdown by investor type Geographical breakdown Amount placed 6 billion Maturity 15 September 2017 Coupon 1.625% Initial pricing Mid swap + 50 bp Reoffer yield 1.652% Reoffer price 99.865% Settlement date 17 July 2012 Lead managers Crdit Agricole CIB, Morgan Stanley, UniCredit 23 24 Short-term funding programme First bill auction 13 December 2011 Tenor 3 month (91 days) Maturity 15/03/2012 Volume 1.971 billion Currency Euro Weighted average yield 0.2222% Average Price 99.94386% Bid/Cover ratio 3.2 Auction carried out by Finanzagentur using the Deutsche Bundesbank EFSF bidding system Bill auctions will be held throughout 2012. So far, auctions have been held on the following dates: 17 January 21 February 6 March 8 March 20 March 3 April Tenor 3 month (91 days) Maturity 06/12/2012 Volume 1.997 billion Currency Euro Weighted Average yield -0.0454% Weighted Average Price 100.01147% Bid/Cover ratio 3.0 Latest bill auction 4 September 2012 17 April 8 May 22 May 5 June 19 June 3 July
17 July 7 August 21 August 4 September
25 2 Going forward 26 Optimising EFSFs firepower On 29 November, euro area Finance Ministers agreed to increase EFSFs firepower by optimising its lending capacity within the existing Framework Agreement and without extending the amount of guarantees by Member States whilst also preserving EFSF high credit rating. Two options are available: 1. Partial risk protection EFSF provides partial protection certificate to a sovereign bond issued by a Member State. After issue, certificate could be detached and freely traded separately. Holder received fixed credit protection of 20-30% of principal. To be used primarily under precautionary programmes 2. Creation of a Co-Investment Fund (CIF) Combine public and private capital. CIF buys bonds in primary and/or secondary markets. It could be funding through the following classes of instrument: Senior debt instrument : credit rated and targeted at traditional fixed income investors Participation capital instrument : Junior to senior debt instrument, aimed at sovereign wealth funds, risk capital investors, would participate in upside generated EFSF investment: absorbs first proportion on any losses incurred EFSF would benefit from the flexibility to deploy both options which are not mutually exclusive 27 Going forward: creation of a permanent crisis mechanism The creation of the European Stability Mechanism (ESM) an intergovernmental organisation under public international law ESM will take over all the features of the amended EFSF effective lending capacity of 500 billion total subscribed capital of 700 billion, with paid-in capital (80 billion) and committed callable capital (620 billion) Following established IMF policies regarding private sector involvement ESM will claim preferred creditor status (except for countries under a European financial assistance programme at signing of treaty) Standardized and Collective Action Clauses (CACs) will be included for all new euro area government bonds from January 2013
EFSF Commitments and lending capacity EFSF commitments for Ireland, Portugal, Greece and Spain Ireland 17.7 bn Portugal 26.0 bn Greece Up to 144.6 bn - 35.5 bn (PSI + Acc. Int.) - Up to 109.1 bn (2 nd programme, including up to 48 bn bank recap.) Spain Up to 100 bn for recapitalisation of banks 188.3bn + 3.7bn (cash buffer from EFSF v1*) + up to 100 bn (Spain) = 292 bn EFSF remaining lending capacity 440 bn - 292 bn = no less than 148 bn * As part of the credit enhancement structure of the initial EFSF, a cash reserve and loan-specific cash buffer was deducted from loans to Member States. Since the adoption of the amended version of the EFSF in October 2011, the cash reserve and loan-specific cash buffer are no longer required 28 29 The way forward
2
Up to July 2013 EFSF may engage in new programmes in order to ensure a full fresh lending capacity of 500 billion. 500 bn lending capacity can also be reached through accelerated capital payments, if needed. 192 bn already committed to Ireland, Portugal and Greece; up to 100 bn committed to Spain for recapitalisation of banks 1
ESM entry into force expected by October Paid in capital 1st and 2 nd Tranche 32bn H2 2012 Oct. 2012 January 2013 Paid in capital 3rd and 4th Tranche 32bn during 2013 July 2013 EFSF ceases to enter new programmes January 2014 Paid in capital 5thTranche 16bn early 2014 148bn 500bn 2 EFSF Lending capacity ESM EFSF committed 1 The amount provided to Spain for bank recapitalisation will be transferred to the ESM once it becomes operational, thus the combined EFSF-ESM lending capacity of 700 bn will be maintained EFSF funding programme billion 2011 (completed) Q1 2012 (completed) Q2 2012 (completed) Q3 2012 Q4 2012 Total for 2012 2013 2014 Ireland 7.5 1.75 2.8 0.0 0.0 4.55 5.7 - Portugal 6.9 2.75 5.2 2.6 2.4 12.95 2.85 3.45 Greece - 5.9 8.5 0.0 11.5 25.9 17.1 14.9 Total Lending Requirements 14.4 10.4 16.5 2.6 13.9 43.40 25.65 18.35 Long Term Funding Programme 16.0 8.5 10.5 12.48 11.0 42.44 40.50 33.2 Outstanding Bill Programme (end of quarter) 2.0 14.4 21.8 15.26 13.48 - 12.0 12.0 Preliminary EFSF funding programme (subject to market conditions and requests by programme countries) Please note that figures are based on estimates and may vary depending upon market conditions Negative gaps between Lending requirements and Long Term Funding will be covered by the Bill Programme. 30 31 Contacts
Christophe Frankel CFO and Deputy CEO +352 260 962 26 c.frankel@efsf.europa.eu
www.efsf.europa.eu Bloomberg: EFST<GO> 32 EFSF: issuance Bond issue Launch date Coupon Maturity Amount Issued at MS/*Eonia EU000A1G0A16 29/08/2012 2.25% 05/09/2022 3 billion +57bp EU000A1G0AS8 03/08/2012 1.125% 01/06/2015 1.48 billion (tap) Auction EU000A1G0AU4 10/07/2012 1.625% 15/09/2017 6 billion +50bp EU000A1G0AR0 27/06/2012 2.625% 02/05/2019 1 billion +75bp EU000A1G0AT6 12/06/2012 3.375% 03/04/2037 1.5 billion +130bp EU000A1G0AS8 24/05/2012 1.125% 01/06/2015 3 billion +18bp EU000A1G0AK5 09/05/2012 2.00% 15/05/2017 1 billion (tap) Auction EU000A1G0AJ7 26/04/2012 3.875% 30/03/2032 1 billion (tap) +105bp EU000A1G0AR0 24/04/2012 2.625% 19/05/2019 3 billion +77bp EU000A1G0AK5 21/03/2012 2.00% 15/05/2017 4 billion +38bp EU000A1G0AJ7 19/03/2012 3.875% 30/03/2032 1.5 billion +115bp EU000A1G0AG3* 08/03/2012 1.00% 12/03/2014 15 billion *-8bp EU000A1G0AF5* 08/03/2012 0.40% 12/03/2013 15 billion *5bp EU000A1G0AE8 05/01/2012 1.625% 04/02/2015 3 billion +40 bp EU000A1G0AD0 07/11/2011 3.50% 04/02/2022 3 billion +104bp EU000A1G0AC2 22/06/2011 2.75% 05/12/2016 3 billion +6bp EU000A1G0AB4 15/06/2011 3.375% 5/07/2021 5 billion +17bp EU000A1G0AA6 25/01/2011 2.75% 18/07/2016 5 billion +6bp Long term *as part of the Greek PSI contribution 33 EFSF: issuance Date Tenor Maturity Volume Weighted average yield Average price Bid/Cover EU000A1G0B98 18/09/2012 6 month 21/03/2013 1.941 billion -0.0181% 100.00913% 2.8 EU000A1G0B80 04/09/2012 3 month 06/12/2012 1.997 billion -0.0454% 100.01147% 3.0 EU000A1G0B72 21/08/2012 6 month 21/02/2013 1.499 billion -0.0179% 100.00905% 2.6 EU000A1G0B64 07/08/2012 3 month 08/11/2012 1.431 billion -0.0217% 100.00549% 3.2 EU000A1G0B56 17/07/2012 6 month 24/01/2013 1.488 billion -0.0113% 99.99800% 3.0 EU000A1G04B9 03/07/2012 3 month 04/10/2012 1.913 billion 0.1184% 99.97008% 2.3 EU000A1G0B31 21/06/2012 6 month 20/12/2012 1.470 billion 0.1420% 99.9282% 2.1 EU000A1G0B23 05/06/2012 3 month 06/09/2012 1.990 billion 0.1370% 99.96539% 2.3 EU000A1G0B15 22/05/2012 6 month 11/11/2012 1.478 billion 0.2033% 99.89733% 2.5 EU000A1G0B07 08/05/2012 3 month 09/08/2012 1.961 billion 0.1729% 99.95631% 2.2 EU000A1G0BZ1 17/04/2012 6 month 18/10/2012 1.990 billion 0.2537% 99.87189% 1.9 EU000A1G0BY4 03/04/2012 3 month 05/07/2012 1.979 billion 0.1119% 99.97173% 2.4 EU000A1G0BX6 20/03/2012 6 month 20/09/2012 1.939 billion 0.2040% 99.896997% 2.7 EU000A1G0BV0* 08/03/2012 6 month 12/09/2012 5.5 billion 0.187% 99.902% - EU000A1G0BW8 06/03/2012 3 month 07/06/2012 3.442 billion 0.0516% 99.98697% 2.0 EU000A1G0BU2 21/02/2012 6 month 23/08/2012 1.990 billion 0.1908% 99.90363% 3.1 EU000A1G0BT4 17/01/2012 6 month 19/07/2012 1.501 billion 0.2664% 99.86550% 3.1 EU000A1G0BS6 13/12/2011 3 month 15/03/2012 1.972 billion 0.2222% 99.94386% 3.2 Short term *as part of the Greek PSI contribution 34 Primary market purchases (PMP) Objective: maintain or restore a Member States relationship with the dealer/investment community and reduce the risk of a failed auction Circumstances Countries under a macro-economic adjustment programme or to drawdown of funds under a precautionary programme. Primarily used towards the end of an adjustment programme to facilitate a countrys return to the markets Conditions: Those of macro-economic adjustment programme or the precautionary programme as stated in relevant MoU Limit: No more than 50% of the final issued amount Once purchased: EFSF could Resell to private investors once market conditions have improved Hold until maturity Sell back to country Use for repos with commercial banks to support EFSFs liquidity management
35 Secondary Market Purchases (SMP) Objective: support the functioning of the debt markets and appropriate price formation in government bonds market making to ensure some liquidity in debt markets give incentives to investors to further participate in the financing of countries Conditions: Programme countries: conditionality of the programme applies as in MoU Non-programme countries: conditionality refers to ex-ante eligibility criteria as defined in the context of the European fiscal and macro-economic surveillance framework appropriate policy reforms as in MoU Procedure: Initiated by a request from a Member State to Eurogroup Exceptionally, ECB could issue an early warning. In all cases, subject to an ECB report identifying risk to euro area and assessing need for intervention.
36 Precautionary programme Objective: prevent crisis situations by assistance before Member States face difficulties raising funds in the capital markets and avoid negative connotation of being a programme country Precautionary conditioned credit line (PCCL) access limited to countries with sound economic and financial situation, Clear track record of access to capital markets, respect of SGP* and EIP* commitments Enhanced conditions credit line (ECCL) access open to countries with moderate vulnerabilities that preclude access to PCCL Enhanced conditions credit line with sovereign partial risk protection (ECCL+) An ECCL provided in the form of sovereign partial risk protection (Partial Protection Certificate) Conditions: Beneficiary placed under enhanced surveillance during its availability period All conditions stated in MoU Size: Typical size 2-10% of GDP of beneficiary country. Duration: 1 year renewable for 6 months twice Procedure: lighter request procedure for swift implementation
*SGP: Stability and Growth Pact, EIP: Excessive Imbalances Procedure 37 Finance recapitalisation of financial institutions Objective: limit contagion of financial stress by assisting a country to finance recapitalisation of financial institution(s) at sustainable borrowing costs (particularly to countries where the financial sector is disproportionally large). Circumstances: Countries that are not under a macro-economic adjustment programme*. Any loans must be requested and disbursed to Member States. EFSF will not loan directly to financial institutions In order to determine eligibility for an EFSF loan, a three step approach is applied: 1. Private sector (shareholders) 2. National level (government) 3. European level (EFSF) Conditions: Restructuring/resolution of financial institutions Compliance with European state aid rules Additional conditionality on financial supervision, corporate governance and domestic laws on restructuring/resolution. All conditions stated in MoU * Those countries under a programme, an amount has already been designated within the programme for the recapitalisation of the financial sector (ie 12 billion for Portugal, 35 billion for Ireland)