THE HEAD OF the National Treasury Management Agency has sounded a positive note on Ireland’s potential to make a “sustainable” re-entry to the markets.
John Corrigan, speaking at a Leinster Society of Chartered Accountants event in Dublin, said that the country had taken positive steps towards re-entry in the coming months. This re-entry would be on a phased basis, he said. Some of the steps already taken to achieve this include:
- A long-term bond switch in January 2012
- The sale of Treasury Bills and long-term bonds in July
- The first-ever sale of Irish amortising bonds in August
The next step, said Corrigan, would be to issue inflation-linked bonds.
The average interest rate of just under 6 per cent on the recent sales of long-term bonds and amortising bonds is higher than we would expect to pay on an ongoing basis as we return to the market; but our primary objective was to tackle the “funding cliff” presented by some €12 billion of bonds maturing in January 2014. Reducing that to €2.4 billion has removed a major obstacle to full market re-entry and should, in tandem with continued progress on other fronts, help us achieve lower yields.
The chief executive did, however, warn that “wider euro uncertainties” remain a risk to Ireland’s move towards a full return to the markets. The announcement this morning that Germany’s Constitutional Court – its highest-level court – had approved the European Stability Mechanism treaty is a positive event in this area.
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