Ireland's rating 'constrained by euro concerns'
IRELAND’S SCOPE for being upgraded by the ratings agencies was constrained by ongoing concerns over the euro zone, the head of the National Treasury Management Agency said yesterday.
John Corrigan welcomed the decision yesterday of the German constitutional court on the European Stability Mechanism and the publication by the European Commission of a paper on a European banking union, both of which, he said, were helpful to Ireland.
The NTMA chief executive said that in its discussions with the rating agencies, the situation of the National Asset Management Agency rarely surfaced. He said this was in contrast to the extent to which Nama featured as a topic in Irish public debate.
Mr Corrigan said that when Ireland found itself shut out of the market, the agency decided it would redouble its investor relations programme. This contrasted with, for example, Portugal, which, he said, had disappeared from the international circuit.
In the period May 2011 to the first quarter of this year, the NTMA made 200 presentations to institutional investors. The catch-cry for such meetings, he said, was to under-promise and over-deliver.
He said the discussions the agency had with investors saw a number of issues of concern being raised.
These included Ireland’s willingness and ability to reach its consolidation targets, its prospects for economic growth, the issue of domestic mortgages on the banks’ books, and sentiment about the euro crisis.
He said the good news that existed was most likely already priced into Irish bond yields, as was a deal on bank debt. The wider uncertainty about the euro area remained a threat to Ireland’s re-entry into the bond markets.
Mr Corrigan told a lunch hosted by the Leinster Society of Chartered Accountants Ireland investors were very comfortable with the €2.5 billion funding requirement that will arise in January 2014 and which has been reduced from a “funding mountain” of €14 billion by recent moves by the NTMA.
He said the sale of amortising bonds aimed at domestic pension funds was important as it showed foreign investors that domestic investors were buying Irish paper.
He said the agency’s objective was to achieve sustainable bond market re-entry over the coming months and through 2013.