Strong demand for bonds of EU bailout fund: Bundesbank

(FRANKFURT) - The EU's bailout fund, the EFSF, attracted strong demand on Tuesday at an auction of three-month debt, but the yield on the issue was fractionally higher than a month ago, the Bundesbank said.

The German central bank, which organised the auction, said it had received 4.657 billion euros' ($6.2 billion) worth of bids for 1.979 billion euros' worth of three-month bonds, at an average yield of 0.1119 percent.

That is fractionally higher than for an earlier issue of three-month bonds last month when the yield stood at 0.0516 percent.

The bid-cover ratio, closely watched by the markets, was 2.4, meaning the auction was oversubscribed by that amount.

The EFSF borrows money from the markets at low rates and lends it to countries having difficulty in raising their own financing, such as Greece, Ireland and Portugal.

In addition to its short-term debt auctions, the EFSF also borrows funds long term and last month it successfully placed 1.5 billion euros in 20-year bonds at a yield of 3.956 percent.