No Eurogroup decision on EFSF leveraging likely on Monday

Euro zone finance ministers will discuss on Monday how to leverage their EFSF bailout fund to give it more power without increasing national guarantees, but are unlikely to make any decisions, euro zone officials said.
"The ministers on Monday will come closer to a solution, but not to a conclusion," one euro zone official involved in the preparation of the meeting said.
"The are a lot of ideas around, I don't think anybody can say for sure at this stage what solution will be chosen," a second euro zone official said.
The euro zone is looking at ways to make more effective use of the 440 billion euros of its European Financial Stability Facility (EFSF) because it needs to show markets that it can stabilise the yields of Spanish and Italian bonds on the market — a job now done by the European Central Bank.
The leveraging idea, suggested by the United States, has some opponents in the euro zone, who fear it could lead to higher liabilities for euro zone countries above the 780 billion euros in current EFSF guarantees, or downgrades of either the AAA-rated EFSF or its triple-A guarantors.
"We will examine only options that will not lead to a downgrade — neither for the EFSF nor for one of our member states," the euro zone official said.
Among the ideas under consideration is allowing the EFSF to refinance itself at the ECB's liquidity operations. The EFSF could also guarantee to cover a percentage of potential losses investors could incur in case of a hypothetical sovereign default.
Any solution, however, would not require another round of ratification, officials said, because policy-makers realised how difficult and lengthy the process was given the growing opposition to bailouts in many euro zone countries.
"Everything we are discussing now is based on the assumption that the EFSF framework agreement will not be changed again. That is a very clear parameter. The nightmare of the process of ratification is firmly with us," the first official said. "Technically it can be done."
Increasing government guarantees for the EFSF was not an option, officials said.
"More guarantees is not the way forward, we have to find another way. More guarantees could affect the ratings of member states," the second official said.
Final decisions on the leveraging might not come until the European Union summit on Oct 17.
"Usually such development takes place at the level of EU leaders," the official said.