High interest on EFSF bond

The European Financial Stability Facility (EFSF) placed its first bonds on capital markets on Tuesday. Investors made a beeline for the bonds, bidding almost 45 billion euros instead of the anticipated five billion. This success was paid for with high interest, the left-liberal Frankfurter Rundschau notes, but nonetheless expresses understanding for the move: "On the one hand, in marketing terms it's a good idea to be generous with a first bond issue. After all, investors should come back for more. And on the other hand the bonds are extremely illiquid assets, and therefore have to be more expensive. As a comparison: you can buy and sell 200 times as many German government bonds. And investors have the key European futures contracts to protect themselves against fluctuations. All of that must be taken into consideration to understand why these bonds yield more."

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