most indebted countries in Europe will face greater competition

most indebted countries in Europe will face greater competition as the region begins to issue new securities to finance the bailout of Ireland.

The Financial Mechanism of Stabilization and European Financial Stability Fund to raise up to € 34,100,000,000 (44.6 billion U.S. dollars) to Ireland in 2011, the European Commission said on 21 December. so-called peripheral countries also compete for funds against the AAA rating in Germany and France, which plans to sell a combined total of € 486 000 000 000 of debt next year. funding requirements of Spain is 90 million euros and Portugal may require € 19000000000, analysts at Credit Agricole SA estimate.

Portuguese bond yields to 10 years increased by almost half a percentage point in the past two weeks as investors bet the country can follow Ireland in search of help after European Union officials postponed a decision on whether to let the EFSF buy bonds of the most indebted countries. EU leaders also disagree on the filling of temporary emergency fund of 750 million euros of which EFSF EFSM and shape of the mainstay.

"The effect of exclusion is a major problem for Spain, since they have to come to market very quickly and have much to do," said Orlando Green, assistant director of capital markets strategy at Credit Agricole Corporate & Investment Bank in London . "Financing conditions will be tough until there is greater security in terms of support for sovereign issues."

Ignis Asset Management, UBI Pramerica SGR SpA and Greop Robeco NV, which together manage about $ 340 million, say they will escape the bonds of the peripheral countries until the political leaders to reach a credible solution to the debt crisis.

Spanish Slump

Spanish government securities fell by 5.1 percent in 2010, headed for its worst year since at least 1992, according to indexes of Bank of America Corp. 's unit of Merrill Lynch. Portuguese notes fell 8.6 percent in the same period.

The EFSM and 40200000000 € EFSF together provide 85 of Ireland's rescue billion. The participation of EFSM is 22.5 million euros and is part of the EFSF 17.7 million euros.

In addition to funding in 2011, the two funds sell bonds to raise up to € 14,900,000,000 in 2012, the European Commission said on 21 December. Most bonds have maturities of five, seven and 10 years, according to the commission. Next year, the EFSM and EFSF issue a total of seven to eight benchmark bonds each worth 3 million euros to € 5,000,000,000.

The credit ratings of AAA and EFSM EFSF means bonds sold by them, probably more attractive to investors than those of lower-ranking countries. The Luxembourg-based EFSF is supervised by the governments of the euro area and the EFSM is in charge of the headquarters in Brussels, the European Commission.

Bonus payments

Portugal, which is rated A-by Standard & Poor's, has to refinance € 11500000000 of Treasury bonds that mature in March and pay about 10 billion euros of bonds in June, according to Chiara Cremonesi, fixed income strategist with London-based UniCredit SpA

bonds Portuguese fell on December 21 after Moody's Investors Service said it may downgrade the credit rating of the country "by a notch or two", in part, citing the "expected loss of the affordability of debt in the medium term." Portugal posted the highest deficit in the 16-nation euro region last year after Ireland, Greece and Spain. The ratings company put on 15 December in Spain Aa1 on review for possible downgrade.

The yield premium investors demand to hold Portuguesa 10 - year bonds rather than similar maturity German bunds was 361 basis points yesterday, down from last month's record was 460 euro.

Prospective Packages

"It may not have seen the worst of the crisis," said Emilio Franco, chief investment officer at Milan in UBI Pramerica, which manages about $ 48 billion. "We do not exclude the restructuring of debt in the future some of the weaker countries."

While the EU leaders agreed to amend the treaties of the block to create a permanent mechanism of the debt crisis in 2013, have yet to iron out the details of the plan of division and the bridge on immediate measures to stabilize the bond market.

The debt is sold under financial support of the euro area only after a request for assistance made by a country. So far the only nation to tap the fund is Ireland, whose package also includes loans from the United Kingdom, Sweden, Denmark and the International Monetary Fund. Greece before 110 million euros of rescue involved loans from euro area governments and the IMF.

the euro zone governments are discussing the possibility of expanding the role of EFSF so you can buy bonds of countries in need. The current mandate is to sell debt backed by 440 million euros of national interests and use the money to offer help.

"We would like to see that politicians are ahead of the game instead of just reacting when things go wrong before you start to be constructive in this new market," said Kommer van Trigt, a fund manager at Robeco in Rotterdam, which has about 182 billion U.S. dollars in assets. "The sovereign credit problems will not disappear in the short term."