The yields on Irish government bonds rose Thursday to new euro-era highs amid fears that Ireland's bank-bailout bill will keep growing and overwhelm the country's finances.

The payout on Irish bonds _ which rise as their underlying value falls _ has leaped this year despite Ireland's negotiation in November of an emergency credit line from the European Union and International Monetary Fund.

The investor selloff of Irish debt securities reflects growing expectations that Ireland will be forced to make bondholders absorb losses at Irish state-owned banks, a form of default, within the next few years. It comes as Ireland's newly elected government led by Prime Minister Enda Kenny attends an EU summit focused on solving the wider eurozone debt crisis.

Irish lawmaker Gay Mitchell confirmed Thursday that Kenny would seek EU approval for Ireland to shift many billions' worth of its bank debt burdens on to senior bondholders _ chiefly British, German and American banks and hedge funds.

Ireland over the past three years has guaranteed total repayment to senior bondholders in a futile effort to keep the flow of foreign bank lending alive.

Over the past year Ireland's six largely state-owned banks have been deserted by many investors regardless, leaving them heavily dependent on short-term funds from the European Central Bank and Irish Central Bank exceeding euro180 billion ($250 billion). A fresh wave of bank bonds is due to mature within the next few months.

"We have a problem with recapitalization of our banks. We're not threatening anybody. We're saying please help us out on this. ... Ireland is not capable on its own of doing this," Mitchell, a European lawmaker for the governing Fine Gael party, said in a phone interview from Brussels.

The rising bond yields do not directly hit Ireland's debt financing costs, because the EU-IMF loan package means Ireland has no immediate need to seek money from bond markets. Ireland would have to pay these higher yields only if it auctioned new bonds now.

Ireland this year has drawn more than euro11 billion ($15.5 billion) from the EU-IMF loan pool, which charges an average interest rate of 5.8 percent. By contrast, if Ireland had to turn to the bond markets now for funds, it would have to pay nearly double that.

The yield on Ireland's 10-year bonds broke through the 10 percent barrier for the first time Wednesday and peaked Thursday at 10.21 percent. More alarmingly, the yields on shorter-term securities surged even higher, reflecting the view that an Irish default could come within the next few years.

The yield on Irish 3-year bonds topped 11 percent for the first time Wednesday and reached 11.13 percent Thursday. Trade in Irish 2-year notes has been more volatile, reaching a yield of 10.7 percent Wednesday but slipping back to 10.15 percent Thursday _ still considered just as risky as a 10-year bond.

Ireland's finances have been ravaged by the 2008 collapse of a property-driven boom and its decision to insure the banks' foreign bondholders against losses.

That bank insurance scheme, designed to prevent six Irish banks from falling like dominoes, failed to prevent Ireland from being forced to nationalize four of the banks and take a major stake in a fifth. Those moves transformed the banks' private bond obligations into a state debt burden currently estimated to exceed euro50 billion ($70 billion).

More than half of the EU-IMF's euro67.5 billion ($95 billion) credit line has been earmarked for bolstering the banks. But Ireland says it will publish new stress-test results on four banks March 31 that could raise recapitalization needs by up to euro35 billion ($50 billion) more _ unless a new deal shifting some losses to bondholders receives EU backing.