Ireland gets deal to ease bank debt

(DUBLIN) - Ireland said Thursday it had agreed with its bailout partners to replace payment of a 3.06-billion-euro ($4.06 billion) promissory note due this weekend with a long-term government bond.

Finance Minister Michael Noonan said the agreement, covering funds used to help in the rescue of the Irish Bank Resolution Corporation (IBRC), formerly Anglo Irish Bank, would help ease Ireland's debt burden this year.

He told parliament the deal "reinforces the commitment of our European partners in assisting the state in its path to recovery," adding that it "does not involve any adjustment or variation" in terms.

Irish officials had been in talks for some time with the International Monetary Fund, the European Union and the European Central Bank to renegotiate the debt deal.

"Put simply, 3.06 billion euros will be settled by delivery to IBRC of a long-term government bond with an equivalent fair value," Noonan told the Dail, the lower house of parliament.

An ECB spokesman urged Ireland to continue to honor its commitments in order to regain the trust of the bond market, highlighting the "unprecedented support" given by the euro area to the Irish banking sector.

"We certainly expect that also in the future the promissory notes will be served according to the schedule to which the government has committed itself," the spokesman said.

Central Bank governor Patrick Honohan warned this week that the promissory notes payment schedule had "become a source of risk to financial stability."

"A way of funding this cash payment over a much longer period would clearly help reduce this risk," he said.

In November 2010, after the collapse of a property boom led to a banking crisis, the IMF and EU agreed a 85-billion-euro rescue for Ireland.