EU Paper Says EFSF Special Vehicle Would Be Used For Bond Purchases

Banks -EU Source. – Published on The Wall Street Journal, by Matina Stevis, OCTOBER 24, 2011.

BRUSSELS (Dow Jones)–Euro-zone leaders are considering setting up a special purpose vehicle that would be used to attract public and private funds and would buy bonds and raise funds for bank recapitalization, a senior E.U. official familiar with the ongoing discussions said Monday. 

The source said this is one of two options to boost the firepower of the regional bailout fund–a key element of a promised comprehensive response to the debt crisis and to protect the likes of Italy and Spain from contagion. The paper says the two options could be combined … //

… Under the second, special purpose vehicle option, the EFSF would create a spin-off to attract public and private funding. The Special Purpose Investment Vehicle would be used for bond purchases in both the primary and secondary markets, as well as for bank recapitalizations.

This type of vehicle could be created either on a unified, European level or separate Italian, Spanish or other member state spin-offs could be established.

“One or more SPIVs would be established. Each dedicated SPIV would have a mandate to facilitate funding of member states through loans and invest in sovereign bonds of a specific country in the primary and secondary markets,” the official said, citing the paper. (full text).


European Financial Stability Facility EFSF, created by the euro area Member States following the decisions taken on 9 May 2010 within the framework of the Ecofin Council. About EFSF: on;
links: International and Europe institutions.


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