FRANKFURT, Jan 17: The European Financial Stability Fund (EFSF), enjoyed strong demand on Tuesday at an auction of six-month debt, Germany's central bank said, only a day after ratings agency Standard & Poor's downgraded it.

The Bundesbank, which organised the auction, said it received 4.6 billion euros ($5.9 billion) worth of bids for 1.5 billion euros worth of sixmonth bonds on offer, at an average rate paid to buyers of 0.2664 per cent.

The bid-cover ratio, closely watched by the markets, was 3.1, meaning the auction was heavily oversubscribed.

'The success of today's auction confirms investors' confidence in the EFSF as a high quality issuer,' said Christophe Frankel, deputy head of the fund.

The auction followed other successful sales by Greece and Spain on Tuesday as borrowing costs across the weaker eurozone periphery states generally fell despite continuing concerns over the debt crisis.

On Monday, Standard &Poor's downgraded the EFSF by one notch to AA+ but said it would restore its top AAA ranking if the fund obtains additional guarantees.

The decision was the result of downgrades to France's and Austria's ratings from AAA, since they serve as top-level guarantors of the fund, the agency said in a statement.

German Economy Minister Philipp Roesler downplayed the downgrade, telling reporters in Berlin it was 'no surprise.

'What is important for us is how the markets see the facility. Today we have seen that the bonds are three-times oversubscribed,' added the minister.

Roesler added there was 'absolutely not' a chance that Germany could find its prized triple-A rating under threat.

The downgrade prompted a wave of criticism against S&P, with some accusing it of wanting to push an American-style economic system in Europe and discourage austerity.

However, Joerg Asmussen, a member of the European Central Bank's executiveboard, dismissed this idea.

'This opinion goes in the direction of a conspiracy theory, which I reject.

In any case, it is easy to reject this theory when you recall that the United States has itself seen its rating downgraded (by S&P),' he told the Bild daily.

Earlier on Tuesday, the head of the fund, Klaus Regling, also played down the impact.

Speaking in Singapore, Regling said the decision would have little impact because two other agencies, Moody's and Fitch, have maintained their AAA ranking on the bailout fund and both also say that they have no immediate reason to cut France.

'There's no need to get overly excited yet,' he said.

'As long as it is only one ratings agency, there is not much of an impact there is no need to do anything really, said Regling.

The EFSF, which started off with a borrowing power of 440 billion euros, has 250 billion euros left following rescues of Portugal and Ireland.-AFP