Accessing sovereign markets : the recent experience of Ireland, Portugal, Spain, and Cyprus; 2, June 2016

A defining feature of the euro crisis, which we experienced over the past few years, is that market access broke down for some countries or was impaired. Some countries could not find sufficient investors to cover their needs or could not do so entirely at a sustainable cost. In the past crisis, this happened to Greece, Ireland, Portugal, Spain, and Cyprus. This discussion paper collects the experiences of several of these euro area countries as they developed strategies to regain access to affordable financial market financing. Euro area governments created a crisis resolution framework that included the European Financial Stability Facility (EFSF), and European Stability Mechanism (ESM), to help countries regain market access. Governments undergo adjustment programmes or undertake measures to repair the banking sector - that is, to "bring their house in order" and regain investors' trust. For the programme period, a country's financing gap is covered by the EFSF/ESM. During this period, DMOs managed to keep to different degrees some limited market financing and importantly had to launch a strategy to regain full market access. By now, four of the five countries that underwent an EFSF or ESM programme have successfully exited. The objective of this discussion paper is to document the steps which DMOs in Ireland, Portugal, Spain, and Cyprus took to structure their financing during the programme period, where possible, and the strategy they launched in approaching domestic and international bond markets.