Friday 23 February 2018

Any debt haircut for Athens won't extend to Ireland, insists Draghi

Laura Noonan in Frankfurt and Sarah Collins in Brussels

EUROPEAN Central Bank President Mario Draghi yesterday insisted any "arrangement" the ECB might make to ease Greek government debt would not be extended to other bailed-out countries such as Ireland.

The comments came as the ECB was reportedly on the verge of agreeing to forgo full repayment of its Greek bonds as part of an eleventh-hour rescue deal for the stricken nation.

Mr Draghi repeatedly insisted he could give no detail on the ECB's Greek plans.

Asked whether Ireland might benefit from similar treatment if the ECB made an "arrangement" for Athens, Mr Draghi replied: "Greece is unique for ... for everything. We don't want to repeat any experience."

The ECB is believed to hold about €20bn of Ireland's government bonds.

In private meetings Finance Minister Michael Noonan is understood to have repeatedly laboured the fact that Europe is making concession for Greece that it would not make to other countries such as Ireland.

But speaking to reporters in Brussels last night, Mr Noonan insisted that Ireland would "under no circumstances" make any effort to get concessions from the ECB on Irish government bonds it holds even if those concessions were granted to Greece.

Sources say Mr Noonan has been advised that any effort to get the ECB to restructure its Irish government holdings would send a message to the market that Ireland's debt was "unsustainable" and could not be honoured. This would make it more difficult for Ireland to borrow again.

Mr Noonan is instead pinning his hopes on the prospect that any "flexibility" the ECB shows Greece might make Frankfurt more likely to help Ireland to lower the burden of Anglo Irish Bank's €30bn bailout.

The Government wants a new deal that would ease an existing commitment to pay down a €30bn IOU given to Anglo at a rate of €3bn a year. Mr Noonan recently held talks with Mr Draghi to elicit his support on the matter.

Asked yesterday about the meeting, the ECB president declined to comment on whether he was "optimistic" the Anglo issue would be resolved positively.

Mr Noonan yesterday said that a resolution of the Greek crisis would make it easier for Ireland to return to the bond markets because investors would stop pricing in the risk of "contagion" from a disorderly Greek default when they considered Irish debt.

"We're trying to enhance Ireland's capacity to borrow in the markets in the future and consequently to repay our debts," he said, adding that it would be "strategic" for the National Treasury Management Agency to dip a toe into the markets this year to "accumulate some funds in advance" of the bailout tap running out in early 2014.

Irish Independent

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