Euro area rescue fund’s CFO says bond liquidity to remain high

Bonds issued by the euro zone's bailout fund will stay highly liquid even as the European Central Bank (ECB) buys bonds, the finance chief of the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF), told a German newspaper.

"The EFSF will remain a large and regular issuer on the markets in the coming years. Volumes will be around 25 billion euros a year," Christophe Frankel told Boersen-Zeitung. "Investors will receive highly liquid bonds for a pretty long time," he said.

Incorporated in June 2010, the EFSF issues bonds to provide loans to countries in financial difficulties, but from July 2013 was replaced by the euro zone's permanent bailout fund, the ESM.

Frankel said the ESM would issue bonds with longer maturities to help fund the new Greek bailout package.

"For Spain and Cyprus there was no need to choose maturities of more than 10 years. But for Greece we will need longer maturities," he said, without providing further details.

He also said that the ESM would start technical preparation next year to sell debt in currencies other than the euro and would see in 2017 whether there was demand for bonds in any other major currencies.

For now, the focus lies on ensuring high volumes and thereby high levels of liquidity at all maturities on offer for now.

[Reuters]