IRELAND’S CHANCES of being able to successfully return to the commercial bond markets at the end of its EU-IMF bailout programme have been handed a boost by an ECB agreement to begin a new programme of buying bonds issued by bailed-out countries.

The new Outright Monetary Transactions (OMT) programme will apply to bonds Eurozone countries as they begin to emerge from a bailout programme.

ECB president Mario Draghi said the likes of Ireland and Portugal could have second-hand bonds bought directly by the ECB whenever they were “regaining market access”.

The programme, applying to bonds of three years or less, would mean that Ireland would still be likely to find buyers for its shorter-term second-hand bonds when the EU-IMF bailout funds run dry in the middle of next year.

Draghi said the new programme was part of the bank’s efforts to “safeguard the monetary policy transmission in all countries in the euro zone area”.

In a statement the ECB said the basic condition for national bonds being considered for the programme was “strict and effective conditionality attached to an appropriate EFSF/ESM programme”.

The purchase of bonds of individual countries would be considered “to the extent that they are warranted from a monetary policy perspective as long as programme conditionality is fully respected” – though each country would need to submit itself to strict oversight of its financial affairs.

It added that there would be no financial limit to the size of its purchases, and that it would publish weekly updates of the amount it had spent on the programme – including monthly updates on how much it had spent on bonds of individual countries.

In an important move, the bank said the bonds it bought would not be subject to preferred creditor status – meaning that in the event of a country not being able to pay back the amount it borrowed, the ECB would not be in a legal position to muscle out other creditors.

This is unlike cash lent by the EU and IMF under the current bailout programmes, which is ‘preferred’ and would be the first monies repaid if Ireland was to find itself without enough cash to repay its debts as they fell due.

Earlier, Draghi said the ECB  expected only a very gradual economic recovery within the eurozone, expecting economic growth in the 17-member bloc to increase only by between 0.2 and 0.6 per cent.

He also added that there was “no news” to report on the prospect of a deal revising Ireland’s banking debt burden.