Irish and IMF reject bail-out reports

IRELAND'S cost of borrowing rose yesterday as local reports - bluntly discounted by the government and International Monetary Fund - said Ireland might need help from the EU-IMF emergency fund established for Greece.

The interest that investors charge to buy Irish ten-year bonds rose above 6.3 percent, representing a 3.9-point premium over the rates of benchmark German bonds. Both were record highs dating back to the launch of the euro common currency nearly a decade ago.

Rates have risen because of investors' belief Ireland is running out of financial road in its battle to fund a growing bank bailout and its own bills. The higher rates drive up Ireland's costs of funding its ?€87.3 billion (72.8bn) debt, with an auction of ??€1.5bn in bonds set for Tuesday.

Irish ten-year bond rates headed back toward 6.1 per cent after Ireland's finance department and the IMF in Washington dismissed reports claiming the Irish were seeking external help.

The episode underscored the market's nervousness about Ireland's ability to keep paying its bills while absorbing massive losses in private banks. That bailout has already cost Ireland more than ?€25 billion, nearly a sixth of its GDP.