Ireland Urges ECB To Commit To Bond-Buying

– Ireland urges ECB to commit to bond-buying (Financial Times, Oct 26, 2012):

Dublin has asked the European Central Bank to commit to buying Irish government bonds to help smooth the country’s exit from its international bailout at the end of next year.Michael Noonan, Ireland’s finance minister, said on Thursday that the government had asked its international lenders to outline “confidence-building measures” to drive down Irish bond yields as it prepared its long-term return to markets.

“One of these is a statement from [ECB president Mario] Draghi that Ireland could avail of his bond-buying programme,” he said after meeting ECB, European commission and International Monetary Fund officials at the end of the eighth review of Ireland’s bailout programme.

Mr Noonan said it had been estimated gaining access to the ECB’s bond-buying programme could reduce Spanish bond yields by as much as 200 basis points. He said a similar fall in Irish bond yields would bring the country’s long-term borrowing rates down to sustainable levels equivalent to the level of its bailout loans.

He said he hoped Dublin would not have to use any of the agreed exit measures.

In September Mr Draghi said the ECB would offer to purchase eurozone countries’ short-term bonds in the secondary market in a programme dubbed outright monetary transactions, or OMT, that would address “distortions in financial markets”. The ECB has not yet made clear when Ireland would be able to tap the facility.

Dublin was forced into a bailout in November 2010 following a banking crisis that cost the state €64bn. It hopes to be the first eurozone country to exit its programme and has asked its lenders to draw up a report by Christmas on options to help it regain market access.