The first €5 billion tranche of Ireland’s €85 billion bailout has been drawn down by the National Treasury Management Agency (NTMA).
This follows the European Commission’s first bond auction under the €440 billion rescue programme.
The €5 billion auction is the first in a series of sales by the European Financial Stability Mechanism (EFSM) and the Luxembourg-based European Financial Stability Facility (EFSF), which borrow money on behalf of euro zone members.
The NTMA is due to receive some €11.7 billion from the European agencies between now and the end of March to help cover the cost of running the State.
In a statement issued today, the NTMA said: “On January 5th, the European Commission placed a €5 billion bond issue on behalf of the European Union under the EFSM to finance the first tranche of the EU/IMF programme of support for Ireland agreed in December 2010.
In accordance with standard capital markets procedures, this transaction settled today and was drawn down,” it said.
The interest rate on the loans, which averages out at 5.7 per cent, has been sharply criticised by Opposition parties.
Japan yesterday pledged to buy more than 20 per cent of the euro zone’s bond issue, raising expectations that other international investors will support the pioneering fundraising move and help ease the region’s debt crisis.
Bankers close to the deal are confident of attracting support from sovereign wealth funds in China, Norway and the Middle East.
Funds raised from the issue, to be priced next week, will be used to back the €85 billion bailout of Ireland.
Some investors see the bond issue as a precursor to a common euro zone bond market that could rapidly expand.
The European Commission is weighing whether to endorse an overhaul of the bailout fund to make it more agile in responding to the debt crisis. The commission’s recommendations are likely to be included in an important economic report due today.