Deal on €3.1bn Anglo payout nears

There were signs last night that Ireland is nearing a deal on the €3.1bn due at the end of the month under the Anglo IOU deal — meaning the repayment could be postponed.

Irish and troika officials have been working together for weeks to find a way of cutting up to half the €31bn loan, which with interest would come close to €50bn, and spreading repayments over 30 years instead of the current 10.

There were clear signs last night that both Government and EU officials believe a way can be found to deal with the complex arrangement put in place by the previous administration.

Europe Minister Lucinda Creighton said freezing the first major Anglo repayment is “the most logical outcome” of the troika’s work.

Social Protection Minister Joan Burton dismissed rum-ours the ECB is opposed to a deal, adding that comments by Mario Draghi, the bank’s president, this week were “very positive”.

EU officials said work was continuing but would take time to complete. One source said postponing the repayment — the first combining interest and capital — on Mar 30 was “technically possible”.

However, there are pitfalls that have to be avoided, including ensuring that any arrangement does not scare creditors, and that the big contributors to the EU’s rescue fund are satisfied.

“We want to be helpful on this and we understand the concerns in Ireland that this repayment at an interest rate of over 8% is hard to swallow, especially when people are making such a huge effort and delivering,” the source said.

Growth is set to be just 0.5%, making huge debt repayments more difficult, and is influencing the troika to favour postponing the payment.

Opinions are divided over the wisdom of doing something that could be seen as Ireland failing to repay its creditors.

Jobs Minister Richard Bruton warned that Ireland did not want to go down the route of Greece and burn bondholders.

Referring to the deal successfully concluded by Greece, he said: “It is anything but a good deal, it has a devastating impact on ordinary people in Greece. It is not a route that anyone would look at in envy.”

Taoiseach Enda Kenny reiterated what EU leaders said in agreeing the second €130bn bailout for Greece, that the reduction of payment to bondholders of Greek debt was unique.

“Ireland has spent the last 12 months in proving we are a very different country, and that we are now in a very different space,” he said.

If potential investors think Ireland could default on its debts it would push up the cost of borrowing and delay the planned return to the markets next year — creating the need for a second bailout.