AGL 37.72 Decreased By ▼ -0.22 (-0.58%)
AIRLINK 168.65 Increased By ▲ 13.43 (8.65%)
BOP 9.09 Increased By ▲ 0.02 (0.22%)
CNERGY 6.85 Increased By ▲ 0.13 (1.93%)
DCL 10.05 Increased By ▲ 0.52 (5.46%)
DFML 40.64 Increased By ▲ 0.33 (0.82%)
DGKC 93.24 Increased By ▲ 0.29 (0.31%)
FCCL 37.92 Decreased By ▼ -0.46 (-1.2%)
FFBL 78.72 Increased By ▲ 0.14 (0.18%)
FFL 13.46 Decreased By ▼ -0.14 (-1.03%)
HUBC 114.10 Increased By ▲ 3.91 (3.55%)
HUMNL 14.95 Increased By ▲ 0.06 (0.4%)
KEL 5.75 Increased By ▲ 0.02 (0.35%)
KOSM 8.23 Decreased By ▼ -0.24 (-2.83%)
MLCF 45.49 Decreased By ▼ -0.17 (-0.37%)
NBP 74.92 Decreased By ▼ -1.25 (-1.64%)
OGDC 192.93 Increased By ▲ 1.06 (0.55%)
PAEL 32.24 Increased By ▲ 1.76 (5.77%)
PIBTL 8.57 Increased By ▲ 0.41 (5.02%)
PPL 167.38 Increased By ▲ 0.82 (0.49%)
PRL 31.01 Increased By ▲ 1.57 (5.33%)
PTC 22.08 Increased By ▲ 2.01 (10.01%)
SEARL 100.83 Increased By ▲ 4.21 (4.36%)
TELE 8.45 Increased By ▲ 0.18 (2.18%)
TOMCL 34.84 Increased By ▲ 0.58 (1.69%)
TPLP 11.24 Increased By ▲ 1.02 (9.98%)
TREET 18.63 Increased By ▲ 0.97 (5.49%)
TRG 60.74 Decreased By ▼ -0.51 (-0.83%)
UNITY 31.98 Increased By ▲ 0.01 (0.03%)
WTL 1.61 Increased By ▲ 0.14 (9.52%)
BR100 11,289 Increased By 73.1 (0.65%)
BR30 34,140 Increased By 489.6 (1.45%)
KSE100 105,104 Increased By 545.3 (0.52%)
KSE30 32,554 Increased By 188.3 (0.58%)

The euro zone permanent bailout fund, the European Stability Mechanism (ESM), may issue bonds denominated in other currencies than the euro next year to attract new investors, the ESM's Managing Director Klaus Regling said on Thursday. The 500 billion euro fund was created during the euro zone sovereign debt crisis as a backstop for governments cut off from markets. It can lend to distressed sovereigns in exchange for a programme of strict reforms.
"We are looking at a possibility of raising funds in other markets in other currencies. So far, all our activities are in Europe," Regling said. Such foreign issuance would help the ESM attract new investors for example from among those US hedge funds that invest only in instruments denominated in dollars and similarly with Japanese investors.
He said that all future lending from the fund will remain in euros, so if the ESM raises funds in foreign currencies, it will have to hedge and need additional instruments.
"So we are looking into this possibility, but we do not intend to do anything of this sort this year," Regling said.
Ireland, Portugal, Greece, Spain and Cyprus have received conditional loans of 230 billion euros from the ESM and its predecessor, the European Financial Stability Facility (EFSF) since 2010. The EFSF has stopped providing new loans in July 2013 and the ESM became the only institution to deal with potential emergency financing requests from euro zone countries.
Ireland, Spain and Portugal have successfully exited their bailout programmes, with Lisbon being the latest one in May.
Greece and Cyprus are the two remaining euro zone countries receiving financial assistance from the EU and the International Monetary Fund.
"In the case of Greece all interest payments are deferred for 10 years. Greece has saved 4.7 percent of GDP in 2013, or 8.6 billion euros, due to its EFSF programme when compared to the assumed market cost of funding," the ESM said in its annual report. "ESM and EFSF loans have allowed programme countries to reform and regain investor confidence. It is now of key importance that countries continue delivering on their reform agenda," Jeroen Dijsselbloem, who chairs the meetings of euro zone finance ministers, said on Thursday.
The ESM has 80 billion euros of paid-in capital and 620 billion euros of callable capital, which makes it the biggest institution of its kind in the world.
Because it has to invest its 80 billion euro capital to preserve its value, it was also one of the big world investors in the world now, Regling said, adding the ESM investment strategy was very cautious.

Copyright Reuters, 2014

Comments

Comments are closed.