Business Irish

Monday 20 November 2017

Ireland 'faces higher rate of interest' if it returns to the bond markets

Borrowing

Emmet Oliver

If Ireland manages to re-enter the bond market, it will end up paying interest rates far in excess of what it is currently charged by international lenders, NTMA chief John Corrigan has admitted.

Mr Corrigan said, for a period of time, Ireland would have to fund itself on a "parallel" basis, borrowing from the EU/IMF and private-sector bondholders. He said this was the only way it could be done, as it was not possible to simply swap one form of lending for another in a short period of time.

He said while Ireland was paying about 3.5pc for its loans from the two European funds, there was no way Ireland would be charged this cost of borrowing on the open markets. "This will cause some public debate," Mr Corrigan added.

The treasury chief said Ireland had to enter the bond market in 2013 at the latest, with earlier moves starting towards the end of 2012.

Crisis

Mr Corrigan said the main factor weighing against Ireland was the wider eurozone crisis.

"There is no point in fretting over Greece, whatever is going to happen there is going to happen," he said.

The NTMA was still selling short-term debt, Mr Corrigan said, and slowly building this up until a period came where more long-term deals could be done. He said investors were mainly interested in "debt sustainability" and Ireland needed to generate a primary budget surplus of 1pc of GDP.

Mr Corrigan said it was not right to say NTMA staff were not working hard since Ireland left the markets.

He said 12 people in the debt issuing office were engaged in other activities.

Meanwhile, the State Claims Agency revealed that costs were not coming down in terms of legal fees and awards the State must pay out for injuries and accidents involving the arms of the State.

The agency's representative said many legal costs were appealed to the taxing master, but the agency was not always successful.

Sean Fleming TD said he was "outraged" by the costs the agency was still facing.

Irish Independent

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