Ireland aims for bond market return later this year
IRELAND, funded by a European bailout through 2013, is seeking to return to international bond markets through the sale of bills in the second half of the year, said John Corrigan, head of the nation's debt agency, the National Treasury Management Agency (NTMA).
Ireland will likely "have to get back into the bond markets during the course of 2013," Corrigan, chief executive officer of the NTMA, said at an event organised by Dublin-based securities firm Davy in New York yesterday.
"We've been meeting investors regularly every six months. In the last six months, we would have met 250 international institutional investors."
While Irish Prime Minister Enda Kenny aims to be the first of three bailed-out euro-area countries to wean itself off aid, the IMF said last month the prospects of the nation's program success "remain fragile" amid the region's escalating debt crisis.
The state, which exited bond markets in September 2010, is seeking to test investor appetite this year, before a full return to the market by mid-2013.
Ireland's aim is to reach a primary balance of 1pc in 2014, which may stabilise the nation's public debt as of percentage of gross domestic product at 119pc, Corrigan said.
Asset sales "would obviously positively impact that figure," he said. "If there were to be further measures of debt relief, which is the subject of discussion between the Irish authorities and the troika, clearly that would be a bonus in terms of the debt stabilisation."
The so-called troika refers to the European Union, IMF and European Central Bank.
Regulatory changes to encourage pensions to buy annuities priced off of Irish bonds may also increase demand for the government's debt, Corrigan said.
"If we get there, and I would be quietly confident that there's good prospect that we will, that will be a significant game changer in terms of unlocking pent up demand," he said.
Ireland's October 2020 bonds, regarded as the nation's market benchmark, yielded 7.97pc yesterday, compared with 8.15pc at the start of November.
The country pays interest of about 3.8 percent on the 45 billion-euro ($57.3 billion) bailout from its European benefactors and about 4.7 percent for the portion of the 22.5 billion-euro loan package it borrowed so far from the IMF.
"It's got to be real access, genuine demand," Stephen Lyons, a credit an analyst at Davy, said of Ireland seeking to tap the bill market this year. "I don't think they're going to issue T-bills for the sake of it until the pricing makes sense."
Nouriel Roubini, professor at New York University's Stern School of Business, said yesterday the Irish economy is "clearly double-dipping," after a report showed its services sector contracted in December for the first time in 2011.
The nation will have positive economic growth this year amid "resilient" exports, Corrigan said.
Ireland's economy shrank in the third quarter of 2011, following two quarters of growth, as cooling global demand dented the country's hopes of an export-led recovery. Last month, Finance Minister Michael Noonan cut growth projections for the economy in 2012 to 1.3 percent from 1.6 percent, as the euro-region debt crisis escalated.
"We're doing all in our power so that Ireland can position itself to return to the markets," Corrigan said. "That in itself isn't sufficient" as Europe struggles to resolve its crisis.