Irish Foreign Minister `Absolutely' Rules Out Activating Euro Bailout Fund
Irish Foreign Minister Micheal Martin “absolutely” ruled out activating the European bailout package for Ireland, saying markets will calm after the government clarifies bank-bailout costs and the budget outlook.
The government in Dublin will provide details of the bailout costs for Anglo Irish Bank Corp. by the end of the week and soothe bond investors after Standard & Poor’s said more than 35 billion euros ($47 billion) may be needed, Martin said. The budget is financed through the middle of next year and Ireland won’t need money from the euro fund, he said.
“By and large we are very confident we’ll come out of this,” Martin said in an interview today in New York. “Clearly it’s challenging and so on, but there’s no necessity for the triggering of such a mechanism.”
Buyers of Irish debt reacted to concern about the bank bailout, pushing the extra yield investors demand to hold the country’s 10-year debt over German bunds to a record today. Martin said he’s confident that calm will return when the cost for recapitalizing the state-owned lender is released this week and the government publishes its fiscal outlook in mid-October.
He also dismissed speculation about a default among holders of Anglo Irish’s senior debt, which was cut yesterday to the lowest investment grade rating by Moody’s Investors Service.
“The minister of finance has made it clear that he’s not into default on senior bondholders, not into that at all,” Martin said.
The premium investors charge to hold Irish 10-year debt over the German equivalent, Europe’s benchmark, rose to 448 basis points today from 430 yesterday.
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