By Simon Miller

The European Financial Stability Facility enojoyed strong demand for its bond sale despite its downgrading by Standard & Poor’s (S&P).

The €1.5bn (£1.23bn) auction of six-month bonds was heavily subscribed with bids worth €4.6bn making a bid cover ratio of 3.1.

Deputy head of the EFSF Christophe Frankel said the acution confirmed investors’ confidence in the bailout fund and said there were tro be regular auctions

In a statement he commented: "The success of today's auction confirms investors' confidence in the EFSF as a high quality issuer. As we establish our short-term bill programme, we will now be holding regular auctions focusing on 3-, 6- and 12-month tenors.”

Tuesday's auction was organised by the Bundesbank. The average yield was 0.2644%.

On Monday, S&P cut its rating of the fund from AAA to AA+ to reflect the downgrades of France and eight other eurozone countries last Friday.

In Singapore this morning, EFSF head Klaus Regling dismissed any effect of a downgrade from one ratings agency.

"As long as it is only one rating agency there is no need to do anything really. You had the same situation when S&P downgraded the US. The others did not follow. There was no market impact,” he commented.

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