Irish See Opportunity in Greece’s Debt Hole - We shall soon be presented with an excellent Euro shorting opportunity

“Had a European bank resolution fund been in place, some of the resolution of Irish banks would have been part of that,” said Alan Ahearne, economics professor at Galway University, who acted as adviser to former Finance Minister Brian Lenihan. “The Irish government has a legitimate claim that there should be some sort of burden-sharing on a European level.”

The government might also seek lower interest rates and more time to payback its 67.5 billion loans from the EU and IMF. The state is saving about 10 billion euros from concessions granted at a July 21 summit, according to Kenny.

Emergency Funding

Finance Minister Michael Noonan also may seek to tap any structural funds designed to drive economic growth in Greece. The Greek economy is set to contract 5.5 percent this year and 2.5 percent next, according to the country’s 2012 budget.

Ireland’s 10-year bonds yield about 613 basis points more than German bunds, down from an average this year of 705 and below the peak of more than 1,100 reached in July. Greek yields are more than 2,200 basis points higher than those of Germany.

Another option is to pursue a discount on the emergency funding being provided by the Irish central bank and the European Central Bank to Anglo Irish Bank Corp., according to Blessing at Collins Stewart. The nationalized lender, which is being wound up over a decade, owed 40.1 billion euros to central banks and monetary authorities at the end of June, the bank said in August.

“The Irish Government needs something to reassure the general public that we aren’t being treated unfairly,” said Blessing. “Haircuts on Ireland’s sovereign debt may be ruled out given the negative consequences. But there may be other, less dramatic ways of achieving debt reduction by less visible, less damaging means.”

via www.bloomberg.com