COMMUNICATION TO THE COMMISSION Main terms of the EFSF Amendment Agreement with Portugal on the extension of maturities
Date: 2013-06-10
Institutions: European Commission
Subjects: EU financing, Portugal, interest, long-term financing, stability pact

EUROPEAN 
COMMISSION 

Brussels, 10.6.2013  
SEC(2013) 348 final 

COMMUNICATION TO THE COMMISSION 

Main terms of the EFSF Amendment Agreement with Portugal on the extension of 
maturities 

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COMMUNICATION TO THE COMMISSION 

Main terms of the EFSF Amendment Agreement with Portugal on the extension of 
maturities 

The  euro  area  Member  States  agreed  in  May  2010  to  create  a  European  Financial  Stability 
Facility (EFSF) in order to financially support euro area Member States in difficulties caused 
by  exceptional  circumstances  beyond  their  control.  The  EFSF  was  incorporated  on  7  June 
2010 for the purpose of providing stability support to euro area Member States. 

By  a  decision  of  the  representatives  of  the  governments  of  the  euro  area  Member  States  of 
7 June  2010  the  Commission  was  tasked  with  duties  and  functions,  including,  inter  alia, 
providing  proposals  to  the  euro  area  Member  States  on  the  loan  facility  agreement  to  be 
signed with the beneficiary Member State(s). 

The EFSF Framework Agreement was signed in June 2010 and amended in September 2011. 
It refers to certain tasks of the Commission pursuant to the decision of the representatives of 
the governments of the euro area Member States of 7 June 2010. 

On  17  May  2011,  the  Eurogroup  and  the  ECOFIN  Ministers  unanimously  decided  to  grant 
financial  assistance  in  response  to  the  Portuguese  authorities'  request  submitted  on  7  April 
2011. A Loan Facility Agreement (LFA) was signed between the EFSF  and Portugal on  27 
May 2011 in line with the Proposal by the Commission adopted on 10 May 2011 (SEC(2011) 
576).  

A  Financial  Assistance  Facility  Agreement  (First  FFA)  was  concluded  with  Portugal  on  9 
December 2011, in line with the Proposal by the Commission adopted on 5 December 2011 
(SEC(2011)  1549).  On  25  May  2012  a  Master  Financial  Assistance  Facility  Agreement 
(Master FFA) was signed covering the remaining disbursements to Portugal in the amount of 
up to EUR 16.5 billion. The main terms for the Master FFA were provided in the Proposal by 
the Commission adopted on 21 May 2012 (SEC(2012) 326).  

In  order  to  support  Portugal’s  efforts  to  regain  full  market  access  and  successfully  exit  its 
programme, the Eurogroup decided on 12 April 2013 to lengthen the maturities of the EFSF 
loans by increasing the weighted average maturity limit by seven years. As a result, the terms 
of the above mentioned EFSF facilities need to be modified.  

In  accordance  with  the  EFSF  Framework  Agreement,  the  Commission,  in  liaison  with  the 
ECB, shall make a proposal to the Eurogroup Working Group of the main terms of the loan 
facilities  to  be  proposed  to  Portugal,  based  on  its  assessment  of  market  conditions  and 
provided that the terms of such assistance contain financial terms compatible with the relevant 
Memorandum of Understanding and the compatibility of maturities with debt sustainability.  

The following main terms of the loan facilities to Portugal are proposed:  

(1) 

The  average  maturity  of  the  financial  assistance  made  available  under  the  loan 
facilities provided by the EFSF shall be increased up to 22 years, provided that the 
weighted  average  maturity  of  the  financial  assistance  made  available  under  the 

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facilities  provided  by  the  EFSF  shall  not  be  extended  by  a  period  in  excess  of  7 
years. 

(2) 

The financial terms as set out in the Master FFA, including the interest rate and the 
components  of  the  EFSF  cost  of  funding,  shall  apply  starting  from  the  initial  final 
repayment date and until the revised final repayment date. 

In  line  with  the  tasks  assigned  to  it  by  the  euro  area  Member  States  referred  to  above,  the 
Commission  is  invited  to  agree  that  the  proposal  is  submitted  to  the  Eurogroup  Working 
Group.  

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