* Disposal plan will see Dublin drip-feed bonds into market
* Irish c.bank says is "comfortable" with ECB summary
(Adds statement from Irish central bank)
FRANKFURT, April 7 A deal struck by Ireland last
year to ease the burden of its bank debt raises serious monetary
financing concerns but they could be mitigated to some extent by
bond sales tied to the debt swap, the ECB said on Monday.
Ireland won European Central Bank approval last year to
stretch out the cost of bailing out collapsed Anglo Irish Bank
after nearly 18 months of talks to slice billions off Dublin's
borrowing needs, cut its budget deficit and help it exit an
As part of the debt swap, Ireland pledged to issue new bonds
worth 25 billion euros ($34.23 billion), but to slowly drip-fed
them into the market via the country's central bank, with a
minimum of 500 million euros to be sold by the end of 2014.
"The liquidation of the Irish Bank Resolution Corporation
(IBRC) raises serious monetary financing concerns," the ECB said
in its annual report, referring to the name Anglo Irish was
changed to after its nationalisation.
"These concerns could be somewhat mitigated by the disposal
strategy of the Central Bank of Ireland."
The Irish Times newspaper reported last month that Ireland
was facing pressure to offload the bonds at a faster pace than
the timetable originally outlined, citing sources familiar with
the ECB's thinking.
Ireland's central bank said it was "comfortable" with the
"As expected, this exceptional operation has received a lot
of scrutiny. The overall design of the operation has been
designed to allay concerns. The ECB summary, with which the
Central Bank is comfortable, reflects this," a spokeswoman for
the central bank said in a statement.
The timetable set out when the deal was struck will see the
Irish central bank sell off at least a further 500 million euros
of the bonds a year from 2015 to 2018, increasing to 1 billion
euros until 2023 and 2 billion after 2024.
The disposal strategy was designed to avoid a flood of Irish
debt coming onto the market on top of regular issuance and the
head of Ireland's debt agency said last year that this was an
important factor for investors in Irish debt.
Dublin was able to raise debt periodically during its
three-year EU/IMF programme, which it exited late last year. It
is fully funded for this year and has raised almost 60 percent
of the 8 billion euros needed to complete pre-funding for 2015.
($1 = 0.7303 euros)
(Writing by Padraic Halpin in Dublin; Editing by Susan Fenton
and Gareth Jones)