Martin rules out going cap in hand to EU for bailout
FOREIGN Affairs 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 will provide details of the bailout costs for Anglo Irish by the end of the week and soothe bond investors after Standard & Poor's said more than €35bn may be needed, Mr Martin said.
The Budget is financed through the middle of next year and the Government won't need money from the euro fund, he said.
"By and large we are very confident we'll come out of this," Mr Martin said in an interview in New York.
"Clearly it's challenging and so on, but there's no necessity for the triggering of such a mechanism."
Mr Martin said he was confident calm would return when the cost for recapitalising the state-owned lender was released this week and the Government published 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.
"The Minister of Finance has made it clear that he's not into default on senior bondholders, not into that at all," Martin said.
There is market speculation the Government will be forced to choose between fully repaying senior bondholders and tackling the region's largest budget deficit.
Two-year government notes slumped yesterday, sending yields to the highest level since Bloomberg began collating the data in 2003.
The yield on two-year Government note rose as much as 46 basis points to 4.7pc. Bloomberg generic data show.
"It's a key test for the market," said Greg Venizelos, a credit strategist at BNP Paribas in London.
"The cost of the Anglo Irish bailout is too high for Ireland to afford without jeopardising its fiscal position." (Bloomberg)