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Berlin - The head of the eurozone's bailout fund is considering offering foreign investors a better deal in a bid to improve sluggish demand, a German newspaper reported on Sunday.
Klaus Regling, who runs the European Financial Stability Facility (EFSF), is mulling plans to offer investors outside the eurozone an insurance of 30% against a possible default, the Bild am Sonntag weekly said.
Without citing sources, the paper quoted Regling as telling a meeting of German parliamentarians last week that the current 20% guarantees offered were "too low" to cover investors' risk.
A temporary fund, the €440bn EFSF uses guarantees issued by eurozone governments to raise funds on money markets which are then lent to debt-wracked eurozone countries such as Ireland, Portugal and Greece.
However, raising the guarantees offered to investors would reduce the firepower of the fund, already considered far too small to intervene if the debt crisis were to claim a larger victim such as Italy.
European governments had hoped the fund would enjoy broad support in cash-rich countries such as China, but enthusiasm thus far has been muted.
Nevertheless, last week the fund reported strong demand for its first bond auction of the year, during which it raised €3bn in three-year bonds.
EU leaders agreed in December that the permanent successor to the EFSF, known as the European Stability Mechanism or ESM, should come into force in July 2012, earlier than first mooted.
Bild am Sonntag said officials were also mulling changing the way the ESM should be set up.
Citing German government sources, the paper said debates were under way as to whether to arm the fund with its €80bn in one go, rather than putting in smaller tranches over several years under the current plan.
