European Union issues $6.4 billion bond to assist Ireland and Romania

European Union issues $6.4 billion bond to assist Ireland and Romania

2011-03-18 03:04:39 GMT+7 (ICT)

BRUSSELS (BNO NEWS) -- The European Commission on Thursday placed a $6.4 billion (€4.6 billion) bond issue on behalf of the European Union to assist Ireland and Romania.

Ireland will be lent $4.67 billion (€3.4 billion) under the European Financial Stabilization Mechanism (EFSM) and Romania will receive $1.6 billion (€1.2 billion) under the Balance of Payments (BoP) facility.

The Commission informed that the successful placement was a sign of continued confidence in the stability measures set up by the EU for dealing with the crisis in Ireland and Romania and it confirms the role of the EU as a prime issuer.

In November 2010, the Commission agreed on a joint financial support package for Ireland along the European Central Bank and the International Monetary Fund (IMF). Ireland accepted the EU bailout after intense negotiations that divided the government then-led by former Prime Minister Brian Cowen.

As part of the package, Ireland receives assistance loans under the EFSM and also EFSF, the IMF as well as bilateral loans. The $4.67 billion will be disbursed to Ireland on March 24. This will be the second EFSM support to Dublin after the January 12 transaction of $7 billion (€5 billion).

On the other hand, Romania receives assistance loans under the BoP facility which specifically targets non-euro area Member States. The $1.6 billion will be disbursed on March 24 as well.

The total EU assistance to Romania amounts to $6.79 billion (€4.85 billion), including previous loan disbursements under BoP. An additional $18.2 billion (€13 billion) has been provided by the IMF and from bilateral assistance.

The European Commission is empowered to contract borrowings on the behalf of the EU for the purpose of funding loans made under the ESFM. The BoP facility's support s available only to Member States which have not yet adopted the Euro.

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