Borrowing to replace promissory note ‘could be seen as new bailout’

Borrowing money from the EU’s loan fund to replace the €31bn Anglo promissory notes will require amending the country’s bailout programme and could be seen as a second bailout, officials have confirmed.

This runs the risk of the country losing its poster-boy status as successfully dealing with a difficult situation and emerging from its mountain of debt. This would make it difficult for the country to return to the markets to borrow at affordable rates next year.

It could also increase the country’s debt by 20%, pushing it up close to 140% of GDP next year, a level at which the markets would judge the debt to be unsustainable.