Irish Prime Minister Enda Kenny said the nation won’t default on its debt as he tries to rebuild confidence at a time when investors speculate Greece may struggle to pay back its borrowings.
“The Greek government will obviously deal with this problem in the best way it can,” said Kenny, 59, in an interview withAndrea Catherwood on Bloomberg Television’s “Last Word” inLondon today. “We have no intention of defaulting. We’ve made that perfectly clear. We want to continue to pay our way.”
Irish, Greek and Portuguese bonds fell today amid mounting speculation Greece will have to restructure its debt. All three countries have sought bailouts from the European Union andInternational Monetary Fund, and Kenny’s government wants a reduction on the rate on its loans, which he has described as “too severe.”
“We’re not looking for more money from Europe, we’re looking for greater flexibility,” Kenny said, referring to the rate on the bailout and to medium-term financing for lenders from theEuropean Central Bank. He also said that an increase in Ireland’s 12.5 percent corporation-tax rate to appease fellow EU leaders is “not up for negotiation.”
Ireland’s government last month pledged to inject additional capital of as much as 24 billion euros ($34 billion) into lenders after mounting losses forced the country ask for external help in November. Finance Minister Michael Noonan said on April 8 it’s important to reach an agreement on lower bailout rates before the country taps “serious tranches of money.”
Bonds Fall
Kenny said that Anglo Irish Bank Corp., which is being wound down, may not need further capital. Ireland has injected 29.3 billion euros into the nationalized lender over the past two years. He also said its senior bondholders may be treated differently than those at Allied Irish Banks Plc (ALBK) and Bank of Ireland Plc, which the government says won’t have losses imposed on them.
“The indications are that it won’t need extra capital,” Kenny said, ahead of a planned update in May on the cost of bailing out Anglo Irish and smaller rival Irish Nationwide Building Society. “We’ve made it perfectly clear that senior bondholders in Anglo Irish and INBS” are a “different category” to those in Ireland’s other banks, he said.
Irish bonds fell today, pushing the yield on the country’s 10-year debt to 9.76 percent at the close of trading in London, the highest in two weeks. The yield on Greek and Portuguese bonds of the same maturity rose to euro-era records. European shares declined, with the Stoxx Europe 600 Index dropping 1.7 percent.
Kenny said Ireland’s government has “plenty of time” before interest payments due in October or November “to demonstrate the seriousness of intent” about tackling the country’s banking and fiscal problems.
“We believe that growth projections and initiatives that were taken will lead Ireland to a position where we fix what’s been broken” and generate economic growth, he said.
To contact the reporters on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net; Andrea Catherwood in London at acatherwood@bloomberg.net
To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net
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