JAPAN HAS pledged to buy more than 20 per cent of the euro zone’s first bond issue, raising expectations that other international investors will support the pioneering fundraising move and help ease the region’s debt crisis.

The European Financial Stability Facility (EFSF), the €440 billion euro zone bailout fund, is marketing its first bond issue of up to €5 billion among investors in Europe, the US and Asia.

Bankers close to the deal are confident of attracting support from sovereign wealth funds in China, Norway and the Middle East.

Funds raised from the issue, to be priced next week, will be used to back the €85 billion bailout of Ireland.

Some investors see the bond issue as a precursor to a common euro zone bond market that could rapidly expand.

The European Commission is weighing whether to endorse an overhaul of the bailout fund to make it more agile in responding to the debt crisis. The commission’s recommendations are likely to be included in an important economic report due today.

An initial draft calls for the fund’s lending capacity to be “reinforced” and “the scope of its activity widened”. The strains on Portugal will be highlighted today as Lisbon launches its latest debt auction.

Judging by recent market moves, many investors think Portugal will soon be forced to follow Greece and Ireland into accepting a financial rescue.

Yoshihiko Noda, Japan’s finance minister, said the government planned to use its euro-denominated foreign exchange reserves to buy the EFSF bonds.

Japan’s announcement triggered some selling of German government bonds, the euro zone’s most secure.

Some investors said this showed that Berlin could pay a price for the success of the EFSF bond, which is similarly triple A rated, but expected to offer higher yields.

(Additional reporting by Tony Barber. Copyright The Financial Times Limited 2011)