Market turmoil has got the best of Europe's big bailout fund, forcing it to pull its latest bond issue.
On Wednesday the European Financial Stability Facility confirmed that its €3-billion ($4.12-billion U.S.) bond offering, intended to finance the next bailout loan to Ireland, has been postponed because of "market conditions," according to the group's spokesperson.
The earliest the deal could come back is next week, and the new timeline could cause trouble. Ireland has €4.4-billion worth of debt coming due on Nov. 11, according to FT Alphaville.
Yet there's very little the country can do to boost investor confidence at this point. Greece has decided to hold a referendum on its latest austerity measures, and no one quite knows how the EFSF plans to boost its firepower.
"Investors are still awaiting clarity on the structure of the EFSF and are reluctant to participate until further details have emerged about levering up the mechanism, so we are trying to address their concerns," said one banker who was involved in the offering and quoted by FT Alphaville.
Another banker told International Financing Review that "the issuer did not want to give the impression that it was being opportunistic." The unnamed source also said that "the last couple of days have been terrible and had they gone ahead with the deal, it could have been viewed as desperation."
Whatever the reason, it isn't a move to instill confidence. The last thing the EFSF needs right now is negative publicity. Investors are already on edge and who knows what piece of news could influence them to run from the markets.
Tim Kiladze