* Noonan says European colleagues back plan in principle
* Ireland would seek to refinance in 5 bln euro tranches
* NTMA eyes buyback/bond swap, may lower cash balances
(Adds details, finance minister and debt chief quotes)
By Padraic Halpin
DUBLIN, July 28 The IMF is in favour of Ireland
refinancing its bailout loans and Dublin would like to begin the
process this year if it can get agreement in Europe, finance
minister Michael Noonan said on Monday.
Ireland is seeking to reduce the cost of carrying its debt
by repaying its more expensive IMF loans early, before it repays
aid from the euro zone bailout fund, but needs agreement from
its partners in Europe to change the repayment terms.
Noonan said most of his European Union colleagues were in
favour of the move in principle and he also had the backing of
Klaus Regling, head of the European Stability Mechanism (ESM),
but that it could run into political difficulties in some
"The IMF are in favour of what we want to do, I had a short
discussion with (IMF Managing Director) Christine (Lagarde) and
now we need to talk to our various partners in Europe," Noonan
told a news conference.
"There's no reason in hard cash why any of our colleagues
wouldn't agree to this. The reason is political, there's an
inconvenience for some if they have to go back to their
parliaments and some might have to."
When it was cut off from the markets in 2010, Ireland
borrowed from the International Monetary Fund, the European
Financial Stability Facility (EFSF) and the European Financial
Stability Mechanism (EFSM) a total 67.5 billion euros ($91
Under the deal early repayments must be made proportionately
to all creditors, not just one, but this could be changed if
euro zone finance ministers agreed.
Noonan said he would target the 18 billion euros of the 22
billion owed to the IMF that carry an interest rate of almost 5
percent and look to refinance it in three 5 billion tranches,
beginning before the end of the year.
He said Ireland would keep a residual debt with the
Noonan, who won agreement from Europe to cut the interest
rate and extend the maturities on its portion of the loans along
with other bailed-out counties, said the talks were still at an
exploratory stage and would be taken up again in September.
Euro zone finance ministers are likely to discuss the idea
in September, a euro zone official said on Saturday. Some
diplomats said the political willingness to help Ireland with
its debt load could be there.
The repayment concessions so far granted by Europe are part
of Ireland's strategy to even out the repayment schedule of a
national debt that it believes peaked at 116 percent of gross
domestic product (GDP) last year.
The head of Ireland's debt agency also said on Monday that
it hoped to run another bond swap and debt buyback this year to
lessen its funding requirements for 2016, and may look to hold
lower cash balances to further cut the debt pile.
Ireland, which is fully funded for 2014 and has already
raised almost 90 percent of the 8 billion euros needed to
pre-fund itself for 2015, will likely need to raise just another
8-10 billion euros of debt next year, John Corrigan added.
($1 = 0.7441 Euros)
(Reporting by Padraic Halpin; editing by Kate Holton/Ruth