NTMA chief outlines hurdles to achieving cheaper bond yields
Final cost of bailing out Anglo Irish among the obstacles
THE head of the country's debt agency warned yesterday that a number of milestones would have to be passed before the rate of interest demanded by investors for Irish Government bonds narrowed.
John Corrigan, the chief executive of the National Treasury Management Agency (NTMA), said three issues would calm market jitters:
- Decisions on the rolling over of existing loans by the Irish banks by the end of September,
- Clarity over final cost of bailing out Anglo Irish Bank,
- The upcoming Budget.
Speaking at a 'Confidence in the Media' conference in Dublin, Mr Corrigan said market concerns about the imminent funding challenges facing Irish banks were overdone.
He added that the authorities stand ready to make up any shortfalls.
"We've characterised concerns around this like the millennium bug," Mr Corrigan said.
"We all thought the planes were going to fall out of the sky, the trains were going to stop, the clocks weren't going to work," he said.
"Institutional support is there if necessary to meet the pressures that may arise," Mr Corrigan added.
Meanwhile, the cost of the country's borrowing continued to climb higher yesterday morning.
The rate of interest demanded by investors for Irish Government 10-year bonds rose to 6.64pc by lunchtime - the highest level since we joined the euro at the beginning of 1999.
This compares with a rate of just under 2.3pc for German bonds, as the spread between the two rose over 4.3 percentage points. Speaking after the conference, Finance Minister Brian Lenihan admitted he was concerned about the high rate of interest charged on Irish bonds at this week's auction.
"We will do everything that is essential to protect the common currency and also to put our own economic house in order," he added.
Meanwhile, Mr Corrigan said NAMA needs to start selling its property development assets soon.
"It is essential that NAMA move on as quickly as possible to get asset sales under its belt. We're reasonably confident that we'll see progress on that reasonably soon," Mr Corrigan said.
Also addressing the event, businessman Denis O'Brien said NAMA needs to set a base from which the property market can grow.
"The initial sales will involve losses. The cheap-shot commentators can concentrate on these losses rather than seeing them as a floor from which the property market can rise," he added.
He said Ireland was "under the microscope" of the international financial community. The big story of the past 10 days was not the Taoiseach's 'Morning Ireland' interview but the use of Twitter that spiralled into "critical and damaging" articles across the world.
Mr O'Brien said it was important to highlight the country's positives such as the fact that our GDP remains the second highest in the EU and that unemployment levels were stabilising.