FRANKFURT (MNI) – Ireland has not approached European Financial
Stability Fund head Klaus Regling about possible aid, Regling told
German business daily Handelsblatt in an interview published Tuesday.

Regling, a former German Finance Minister official, also said that
volatile markets will likely calm down once the Irish government has
agreed to a budget for 2011.

Regling, who leads the E440 billion facility created in May to
backstop European countries faced with possible insolvency, reiterated
to the paper that he does not actually expect the EFSF will need to be
used.

Pressed on whether Ireland had already sounded him out about a
possible credit line, Regling said, “no.” Asked if he could imagine
something like that happening, he replied: “Of course there are still
risks in the Eurozone, that is clear. I believe, however, that markets
will calm again as soon as Ireland has agreed to its budget for 2011.”

Even though Ireland and Portugal are currently being pressured by
the markets, Regling said he did not expect an emergency situation to
occur in which the facility would need to borrow and extend credit.

On Monday all three major rating agencies gave the EFSF their top
ratings. Regling told Handelsblatt that he “could not rule out” the
possibility that one of the six top-rated European borrowers could lose
its top rating, and if this were to occur, he said, the EFSF would need
to establish additional guarantees “to boost the creditworthiness of the
whole system.”

Regling’s facility of E440 in guarantees from European Union states
and E60 billion from the European Commission was established in May as
an answer to heightened concerns about the solvency of peripheral
European states. An additional pledge of E250 billion in potential loans
from the IMF means that in theory E750 billion is available to save the
Eurozone, if needed.

Thus far, the facility has not had to issue any securities to meet
the financing needs of troubled states. At the present time, its charter
would run out in the middle of 2013, but there is talk of extending it.

Some observers, including EU Monetary Affairs Commissioner Olli
Rehn, have suggested that the facility should be made permanent. Regling
told Handelsblatt that there is still time to work out this issue, but
that he assumes the facility will work until June 2013.

–Frankfurt bureau; +49-69-720142; frankfurt@marketnews.com

[TOPICS: M$X$$$,M$$CR$,MGX$$$]