Ireland says will stay on bailout exit track regardless of Italy uncertainty

DUBLIN Tue Feb 26, 2013 5:26pm GMT

Irish Deputy Finance Minister Brian Hayes arrives at an extraordinary eurozone finance ministers meeting at the EU Council in Brussels June 14, 2011, to discuss Greece's fiscal adjustment programme. REUTERS/Francois Lenoir

Irish Deputy Finance Minister Brian Hayes arrives at an extraordinary eurozone finance ministers meeting at the EU Council in Brussels June 14, 2011, to discuss Greece's fiscal adjustment programme.

Credit: Reuters/Francois Lenoir

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DUBLIN (Reuters) - The Irish government, seeking to return fully to bond markets and move on from its international bailout, said on Tuesday it would not be put off track by any euro zone uncertainty stemming from Italy's election.

Actions by European partners, in particular the European Central Bank's pledge to buy bonds if needed, were still in place.

"There is a store of confidence that has been built up in the past 12 months from the ECB's move and other moves from the euro zone. We (Europe) can withstand any shock," Ireland's junior finance minister Brian Hayes told Reuters.

"We can't ignore it, but at the same time we can't over-react. There is a strong resolve in Ireland, and a strong resolve in markets as well, that Ireland is going to get back to the markets in a long term way."

Italy's inconclusive election result sent European shares tumbling and kicked bond yields higher in vulnerable debtor countries on the euro zone periphery, including Ireland.

Spanish and Portuguese debt was hit harder than Ireland's on Tuesday, however. Portugal's 10-year yield was around 6.6 percent and Spain's 5.4 percent. Ireland's was 3.9 percent, albeit up 20 basis points since the Italian election.

The new Italy-triggered chapter in the euro zone's debt crisis is also unlikely to cause any immediate concern to Ireland because its debt agency is just 6.5 billion euros shy of funding itself for the whole of 2014 after taking advantage of falling yields over the past 12 months.

At least one analyst did say, however, that the uncertainty over Italy may be enough to put on hold plans to issue a new 10-year bond that many expected would swiftly follow a key bank debt deal with the European Central Bank earlier this month.

"Irish yields are not going to be at the centre of this wave but we're not going to avoid the contagion. We have consistently said that the risks to Ireland are external and the external risks prevail. That was our fear the whole time," said Ryan McGrath, a bond dealer at Dublin-based Dolmen Stockbrokers.

"With the backdrop of uncertainty, market conditions may not be conducive to the NTMA (National Treasury Management Agency) coming to the market in the short term. I'm not saying they won't, it'll just be a lot more difficult."

(Writing by Padraic Halpin; editing by Jeremy Gaunt/Ruth Pitchford)

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