Thursday 18 January 2018

Ireland’s debt outlook may be moved to ‘stable’

Dara Doyle and Louisa Fahy

Ireland has a "reasonable prospect" of having the outlook on its debt rating moved to "stable" and avoiding further downgrades, said John Corrigan, chief executive officer of the National Treasury Management Agency.

Ireland is rated AA1 at Moody’s Investors Service and AA at Standard & Poor’s, and both have “negative” outlooks on the nation’s debt. Fitch has an AA- rating on Ireland, with a “stable” outlook.

“Sentiment towards Ireland as reflected by bond yields has improved,” Corrigan told a Dail committee today.

The National Treasury Management Agency talks to ratings companies at least once a month, he said.

Ireland lost its top credit rating in 2009 as the recession eroded tax revenue and sent the country’s deficit soaring.

The Government is cutting public spending, including workers’ salaries, to rein in the gap, which is more than four times the European Union limit.

The premium investors charge to hold Irish debt over the German bund, Europe’s benchmark government bond, widened by 18 basis points to 170 basis points today after the Government said the 2009 deficit based on an EU measure was wider than previously estimated due to costs related to a bank bailout.

Still, the yield spread has fallen from 284 basis points in March 2009, and Corrigan said last month it may fall to below 100 this year.

Corrigan told reporters after the Dail hearing that he is “hopeful” spreads can narrow.

Oliver Whelan, head of funding at the NTMA, said in an interview today that Ireland’s bond issuance may be “a little over €20bn in 2010 and in the “low 20 billions” in 2011.


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