The legal text establishing the permanent bailout mechanism for eurozone countries, which entered the public domain for the first time yesterday, will further undermine the standing of European government bonds and could lead to “multi-notch downgrades and widespread selling of secondary debt”, some analysts have warned.

The Irish parliament yesterday published the text of the European Stability Mechanism bill that will establish the €500bn European Stability Mechanism, which will replace the European Financial Stability Facility and the European Financial Stabilisation Mechanism, which were set up as temporary means of bailing out stricken countries.