Ireland hoping for rating upgrade as Moody’s reviews status later in month
Ratings agency is only one to hold State at sub-investment grade despite troika exit
The Taoiseach with Qatari prime minister Abdullah bin Nasser bin Khalifa al-Thani: Enda Kenny is optimistic investors in the Middle East would be lured by higher-level status. Photograph: Lydia Shaw
Ireland’s sovereign rating with Moody’s could be upgraded as soon as January 17th when the ratings agency reviews the country’s status.
Moody’s is the only one of the main international ratings agencies to have Ireland at a sub-investment grade level.
In spite of having exited the EU-International Monetary Fund bailout last month and the National Treasury Management Agency’s success in securing €3.75 billion from a syndicated 10-year treasury bond issuance at a competitive yield of 3.543 per cent, the agency’s chief executive John Corrigan said he had no idea if this would sway Moody’s view.
“We just hold our breath at this stage,” Mr Corrigan said. “We’ve given up trying to second guess them. We will just have to wait and see.”
Moody’s view of Ireland has resulted in most Asian investors being unwilling to buy Irish sovereign bonds. Mr Corrigan said yesterday’s issuance included a “smidgen” of buying by investors in the Middle East for the “first time in recent times”.
But interest was predominately from investors in Europe and the US.
Speaking in Doha yesterday following talks with prime minister Abdullah bin Nasser bin Khalifa al-Thani and the Qatar Investment Authority, Taoiseach Enda Kenny said he was hopeful investors there would consider purchasing Irish bonds in the event of a ratings upgrade by Moody’s.
Delegation to Ireland
“Part of the reason that the delegation will visit Ireland is to look at the question of infrastructure, of bond investment and of SME assistance in terms of facilities and access to credit,” Mr Kenny said.
The NTMA received €14 billion worth of orders from investors for yesterday’s issuance. Mr Kenny said this was an indication of the growth of “further confidence in Ireland” after the troika bailout programme.
Mr Corrigan said the State would have cash balances of €19.5 billion.
He said this is 12-15 months of funding for the State. The agency plans to “taper” this to nine to 12 months funding over time.
The NTMA also published its review for 2013. It showed the State drew down €11 billion under the EU-IMF bailout programme last year and the cost of servicing the national debt was €8.1 billion.
The National Pension Reserve Fund has invested €1.3 billion in the Irish economy as it transitions into being the Ireland Strategic Investment Fund, managed by the NTMA.
It also provided a bridging loan of €250 million to Irish Water to cover the start-up costs and the initial phase of water meter installation.