Europe's rescue fund postponed a 3 billion euros (2.5 billion pounds) syndicated bond offering for Ireland on Wednesday after Greece threw the markets into turmoil by announcing its plan to put its second bailout deal to a referendum.
The European Financial Stability Fund (EFSF) said it would try to return to the market soon, but it ruled out any move this week to raise money via the 10-year debt offer. Ireland said it had sufficient reserves to cover its needs for now.
The deal, to ensure Ireland gets its next instalment of funds under an 85 billion euros EU-IMF rescue programme, is now expected to be priced over the next two weeks.
We mandated the deal on Monday so that we would be in position to do a deal today if market conditions permitted. But given market conditions, we decided not to proceed, said Christophe Frankel, CFO and deputy CEO of the EFSF.
We knew we had some time.
Ireland said it had enough money to redeem a 4.39 billion euro bond on November 11 despite the delay. A spokesman for Ireland's debt office, the National Treasury Management Agency (NTMA), said the country had reserves of 11.6 billion euros.
Ireland is contributing 17.5 billion euros towards its 85 billion euros rescue package. It has taken 10 billion euros from its national pension fund and has 7.5 billion euros in existing borrowings.
Greek Prime Minister George Papandreou's bombshell decision to call a referendum on the country's latest bailout sent markets into a spin, with the risk premium on Italian bonds over safe-haven German Bunds hitting a euro-lifetime high on Tuesday.
That jump in risk premiums came despite European Central Bank buying of Italian bonds.
European leaders agreed last week to leverage the EFSF to give it firepower of 1 trillion euros either by offering insurance to purchasers of euro zone debt in the primary market or via a special purpose investment vehicle.
But the referendum announcement has thrown those plans up in the air, and with investors concerned about the EFSF's structure and funding needs, the fund itself is keen to ensure that its return to the market is a success.
As far as signalling is concerned, what would have been taken negatively by the market is if we did not have flexibility and were under constraint to issue at any precise date, said Frankel.
Investors want to understand the new EFSF, the new guarantee, they want to know our funding programme for the rest of the year and what we can say about the latest two instruments that are being considered regarding participation and leverage, he said.
While we have quite a clear view on Ireland, it is less obvious for Portugal. They don't need any more money this year and can wait, but if the market is good, we could do a deal this year. As far as the Greek programme is concerned, it's too soon to be able to say.
Frankel added that the fund could look beyond the bond markets if required.
Our main funding capacity is the bond market, but we have different ways to provide funds to Ireland if needed.
The EFSF needs clarity from its political masters to attract investors.
Right now, investors don't know what its funding needs are, they don't have clarity on its mission and what EFSF's broader structure is. The EFSF needs to be able to provide these answers, said one banker who declined to be named.
The Luxembourg-based fund had mandated Barclays Capital, Credit Agricole and J.P. Morgan for the Irish offer.
Frankel said the EFSF did not have a precise date for reviving the syndicated offer but said a meeting of G20 leaders later this week could bring some calm to markets.
(Additional reporting by Carmel Crimmins in Dublin)