Fixed income managers are more concerned over Ireland's European Union (EU) status than the specifics of its domestic financial crisis.
According to PIMCO portfolio manager Julian Foxall, Ireland was a small part of the global bond index but it was a significant part of Europe.
"We are more looking to it [Ireland] as to how Europe is coping with its problems."
While the EU-International Monetary Fund announced its $85 billion rescue loan last week, managers said the chances of Ireland's banking sector defaulting were still quite high. This is another reason to look for opportunities elsewhere.
Kapstream Capital managing director Kumar Palghat said over the next six to nine months it planned to avoid peripheral debt in Europe.
"Europe still seems very sick. The pain will be felt by bond holders," Palghat said.
He said countries such as Germany and France were in a better situation, while Spain and Portugal were set to be next hit by debt problems.
Meanwhile, the rescue loan itself is under scrutiny.
"The liquidity fix announced the other day, that approach has lost a bit of traction since Greece. The main problem is the debt overhang and the ability of countries like Ireland to service existing debt levels at the same time as implementing fiscal austerity packages," Foxall said.
Both Kapstream Capital and PIMCO said over the past year they had avoided holding Irish debt and the peripheral European countries, such as Greece, which had also been affected.
Further, PIMCO's active fixed interest strategy has held it in particularly good stead, allowing the manager to be underweight in the peripheral countries within the global bond index.
"It also gives us opportunities elsewhere in markets that have better fundamentals, but with prices that have been cheapened by events in Europe," Foxall said.
