Tuesday 20 March 2018

Moody's claim bond sale has no bearing on ratings decision

John Corrigan, CEO of the National Treasury Managment Agency. Pic Frank Mc Grath.
John Corrigan, CEO of the National Treasury Managment Agency. Pic Frank Mc Grath.

Joe Brennan

WEDNESDAY'S much-lauded sovereign bond sale by the NTMA will not necessarily improve its credit rating, rating agency Moody's has said.

The ratings agency, the only one of the big four to still rank Ireland at sub-investment grade or "junk" status, is due to update its verdict on Ireland's creditworthiness this Thursday.

Many commentators have predicted that this week's successful bond sale by the Irish government, which helped to lower sovereign borrowing costs across Europe, had greatly improved Ireland's chance of receiving a ratings upgrade.

But the country's first foray back to international bond markets, "has no direct relationship to Ireland's rating", Moody's analyst Kristin Lindow said yesterday.

However, Ms Lindow added that the transaction was "credit positive" and "confirmed broad investor appetite for the government's debt at quite low yields".

John Corrigan, head of debt office the National Treasury Management Agency, joked recently that his people were using their best chat-up lines to persuade Moody's to lift the country's credit rating out of junk. Analysts are split on whether the charm offensive will succeed when the ratings company delivers its latest verdict. Concerns persist the government will have to add to the €64bn it has pledged to help ailing banks.

"On one hand, it seems to be a matter of when, not if Moody's raises Ireland's rating," said Eoin Fahy, an economist at Kleinwort Benson Investors in Dublin.

"On the other hand, it seems Moody's still has some worries about the banks, and to an extent, that tempers expectations that they'll move right now." (Bloomberg)

Irish Independent

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