Securitisation could offer a solution for banks’ loss- making trackers
Irish banks may be able to offload tracker mortgages with ESM guarantee - Cantor Fitzgerald
Securitisation could offer a mechanism to allow banks offload their costly tracker mortgage books. Photograph: Alan Betson/THE IRISH TIMES
Irish banks may be able to off-load their expensive tracker mortgage books by availing of a guarantee from Europe’s permanent financial support, the European Stability Mechanism (ESM), to allow them to securitise them.
“This would significantly improve the viability of the Irish banks and remove a substantial overhang for the Irish Exchequer,” Cantor Fitzgerald said in a note this morning.
The stockbroker also said that it expects that Ireland will the first bailed-out nation to exit a programme, in a move that will be facilitated by both the European Central Bank in the form of outright monetary purchases, and the European Financial Stability Fund, through a credit line with enhanced conditions. Cantor Fitzgerald expects Irish 10-year yields to continue to track German bunds at a 205bps-245bps premium post bail-out, and predicts that Moody’s, the only large rating company retaining a non-investment rating on Irish debt, will upgrade its rating following a planned stress test of Irish and other European banks in the first quarter of 2014.
The Irish economy will grow at a lower pace in 2014, at 1.8 per cent, the broker said, below the official 2.4 per cent growth forecast, although it added that “Ireland is very well placed to benefit from any sustained European or global economic pick-up”.