Eurozone rescue fund gets top rating

Speaking in Tallinn, EU economy commissioner Olli Rehn said he was unconcerned by rising bond yields in Ireland, sparked by a recent report from UK bank Barclays Capital that Dublin could be forced to seek external aid.

"I have full confidence in Ireland and its capacity to act with determination to complete the financial repair and the necessary restructuring of the banking and financial sector," he told journalists.

The Irish government has flatly denied market rumours it is set to make an application to the EFSF, blaming the rising borrowing costs on a misinterpretation of the Barclays report.

Bond yields continued to rise on Monday however, with the country's central bank governor, Patrick Honohan, warning the country may not be able to meet its commitment to cut the budgetary deficit to under three percent of GDP by 2014.

"Some explicit reprogramming of the budgetary profile for the coming years is clearly necessary soon if debt dynamics are to be convincingly convergent," he said.

The suggestion that Ireland be given more time met with a frosty reception in Brussels.

"This is not about sympathies, this is not about clemency, you will not find any of these terms in my speaking points," the commission's economy spokesman said at a daily news conference. "This is about commitments that Ireland has taken."

The EU executive body has also been quick to deny reports in Greek media that a three-year aid package to Greece might be extended.

Athens secured a loan of €110 billion from the EU and IMF on 2 May, although some question the centre-left government's ability to return to capital markets when the aid runs out.

"The big question is whether there will be a restructuring of Greece's debt," Carsten Brzeski, a senior economist with Dutch bank ING told this website "The jury is still out," he added, indicating that the uncertainty was contributing to the country's high borrowing costs.

Monday's decision to award the EFSF with the top credit rating will enable it to make raise money less expensively, should a eurozone government call for financial assistance.

The €440 billion facility will operate as a 'special purpose vehicle,' issuing bonds on the market to raise funds as necessary, backed by euro area member states.

The vehicle is incorporated in Luxembourg under Luxembourgish law, with the German Debt Management Office likely to play a role in any debt issuances.

A further €60 billion can be issued by the commission, backed by the EU budget, with the IMF pledging a further €250 billion as part of a shock-and-awe bailout package agreed by EU member states in the early hours of 11 May.