Europe's bailout fund plans to raise €3 billion from a sale of three-year bonds after Standard and Poor's said in December it may lose its top credit rating.

The European Financial Stability Facility hired Credit Suisse Group, Deutsche Bank and Société Génerale SA to manage the deal, which is the fund's first bond of this maturity and will help finance the bailouts of Ireland and Portugal, it said in an emailed statement.

The sale will follow the EFSF's first bills auction last month and a €3 billion issue of February 2022 bonds on November 7th, 2011, according to data compiled by Bloomberg.

The EFSF plans to sell the bonds after S&P said December 6th the fund may lose its AAA rating.

The bailout fund, which is overseen by the euro-area members and sells debt to finance rescue loans extended to Europe's high-debt and deficit nations, owes its top credit grading to guarantees from Germany, France, Netherlands, Luxembourg, Austria and Finland.

"They need to be quite generous to get this one both out of the door successfully and also leaving some room for tightening in the secondary market," said David Schnautz, a fixed-income strategist at Commerzbank AG in London.

The EFSF's bonds have underperformed benchmark bonds as politicians and policy makers failed to draw a line under Europe's sovereign crisis, which roiled markets for most of last year.

The EFSF may lose its top rating if one or more of its AAA rated guarantors were downgraded, S&P said, after putting 15 euro-region nations on review for a ratings cut.

Investors demand 143 basis points more than government debt to hold the fund's €5 billion of July 2016 bonds, from a low of 45 basis points on March 28th, according to Bloomberg Bond Trader prices.

The EFSF's €5 billion of notes maturing in 2021 have a yield spread of 132 basis points, from a low of 58 basis points on July 5th.

Bloomberg