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First EU bond for Ireland attracts strong demand: HSBC

PARIS — The first issue of bonds by the European Union to fund its bailout of Ireland attracted demand of nearly four times the offer, with 19 billion euros bid for five billion euros' worth of bonds, HSBC bank told AFP.

The yield, or return on the investment, was around 2.5 percent for the bonds which to expire in December 2015, which was at the lower end of expectations, HSBC said.

Although the yield is above that paid by eurozone countries with solid finances, it is considerably lower than the 7.78-percent yield on Irish five-year bonds.

The bonds were issued by the European Financial Stability Mechanism (EFSM), a 60-billion-euro (79-billion-dollar) facility under the auspices of the European Commission that it created last year at the height of the crisis over Greece to fund bailouts.

It is a complement to the 440-billion-euro European Financial Stability Facility (EFSF), which also plans to begin by issuing this month bonds guaranteed by solvent eurozone members to raise bailout funds.

The bond placement is the first by the EFSM and is part of the 67.5 billion euros of aid Ireland is to receive under its EU-IMF bailout.

The IMF will provide up to 22.5 billion euros to Ireland, of which it made 5.8 billion available in mid-December.

The EU plans to raise up 17.6 billion euros from the markets this year under the EFSM to fund its contribution to the bailout for Ireland via four or five bond placements, including three in the first quarter.

It plans to raise a further 4.9 billion euros next year.

The EFSF plans to raise up to 16.5 billion euros this year and up to 10 billion euros next year.