18 MAR 2011
By Arthur Beesley | Irish Times
THE EU Commission has raised a further €3.4 billion for Ireland’s bailout but at a rising interest rate, bringing the total raised so far this year by European bodies to some €13.4 billion.
The commission said its bailout fund – the European Financial Stability Mechanism (EFSM) – raised the money at an issuance spread fixed at mid-swap plus 8 basis points. This was “at the tight end of the initial price guidance”, it said.
This implies the EFSM will pay a rate of 3.257 per cent on the money, which it will lend on to Ireland on a back-to-back basis. The addition of a 2.925 surcharge means Ireland will pay an interest rate of some 6.182 per cent for the money.
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