Sunday 18 March 2018

Return to bond market this year 'possible'

NTMA chief executive John Corrigan at the agency's End of Year Statement at Treasury Buildings in Dublin yesterday. Photo: FRANK MCGRATH
NTMA chief executive John Corrigan at the agency's End of Year Statement at Treasury Buildings in Dublin yesterday. Photo: FRANK MCGRATH

Emmet Oliver Deputy Business Editor

Ireland could return to the bond market as early as this year, but next year is more "probable", the head of the National Treasury Management Agency (NTMA) John Corrigan predicted yesterday.

Despite Irish borrowing costs remaining high, Mr Corrigan said once wider tensions in the eurozone were resolved, Ireland would be in a better position to start borrowing again and cutting its dependence on the IMF/EU for funds.

"The tensions in the eurozone would have to work themselves out first," said Mr Corrigan. "A problem like this is not going to be resolved in the next couple of weeks."

Mr Corrigan said the NTMA did not need to shrink because it was no longer issuing bonds itself. The organisation has a team of 10 people issuing bonds and they were now switching to keeping investors in Irish bonds "up to speed", he said.

Mr Corrigan revealed for the first time that central banks all over Europe and elsewhere were forced to dump their Irish bonds last year when the credit rating of Ireland was cut to BBB by the ratings agencies.

"We have to find investors who are more comfortable with BBB ratings,'' said Mr Corrigan.

He admitted some of these would be hedge funds, but it is understood the NTMA is keen to target major asset management companies such as Blackrock and Pimco.

He said future investors in Irish bonds would be funds who wanted to buy into the "recovery story" of the Irish economy. These funds had their own credit rules, and didn't purely react to credit ratings downgrades.

Mr Corrigan said it was important for the NTMA to keep its bond issuance function intact.

"We can't just be fair weather issuers of bonds," he said at a press briefing in Dublin.

The NTMA chief said he was concerned about the situation in Portugal, where 10-year bond yields were heading toward 7pc.

"It is extremely worrying; it is not sustainable. The mood music is very negative," he said.

The NTMA says the national debt stands at €148.6bn, or 94.2pc of everything Ireland produces. Ireland is paying €4.8bn in annual interest.

Offset against this are assets of €24.4bn in the national pension reserve fund, although €10bn of this will be used as part of the IMF/EU package.

Mr Corrigan said the pension fund was highly liquid and shares, mainly blue chip in nature, could be sold at short notice. He said it was a delicate process though.

Meanwhile, the NTMA revealed that €93m in payments were paid out for claims against the State by the State Claims Agency, up from €63.7m the year before.The extra cost was due mainly to higher claims arising in hospitals, it said.

Irish Independent

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