NTMA plans full return to international debt markets in 2014

Monday 18 November 2013 07.30
NTMA chief executive John Corrigan says agency plans full return to international debt markets in 2014
NTMA chief executive John Corrigan says agency plans full return to international debt markets in 2014

The National Treasury Management Agency hopes to announce in early January plans for a full return to international debt markets. 

Speaking on RTÉ's This Week programme, chief executive John Corrigan said the sale of Irish bonds to international investors next year would be the first sign of "business as usual" following Ireland's clean exit from the bailout programme. 

Mr Corrigan said the NTMA had enough cash to fund itself until the middle of the first quarter of 2015.

Interaction with the markets next year would focus on pre-funding for the rest of 2015. 

He said the agency is planning a series of auctions for next year and would announce details aimed at capital markets early in January.

"The thing is to restore to normal access to the markets which is normally by way of an auction process and that will be the true sign that it is business as usual at that stage," he said.  

Mr Corrigan said that while Ireland raised €7.5bn through engagement with the bond markets this year, this interaction with the markets still only amounted to "opportunistic" engagement.

The NTMA chief had previously expressed his preference for Ireland to have access to a precautionary credit line when it leaves the bailout - describing it then as "a good club to have in a bag". 

But he said that he now believes that investors were less concerned about Ireland having this in place and were "relaxed" about it. 

Mr Corrigan said the profile of investors in Irish bonds had changed over the last year from American hedge funds to so-called "real-money investors" such as insurance companies in France and Germany. 

He believes the Government's decision not to seek a precautionary credit line does not rule out benefitting from future bond-buying programmes by the European Central Bank. 

Responding to reports last week that Ireland would be blocked from the ECB's Outright Monetary Transaction programme, he told This Week: "Well the take on that is unclear, in the sense that the OMT... which hasn't been triggered yet, the precise terms and conditions for accessing that haven't been laid down, number one and number two that programme is designed to address systemic issues which might arise in the markets.

"So if, even still, we were caught up in systemic issues, as part of a wider problem, to the extent that OMT was triggered, we would still be in line to benefit from that."

The NTMA favoured applying for a precautionary credit line until last month, describing it as "a good club to have in the bag".

However, Mr Corrigan said the urgency of applying for such a programme diminished after meeting potential investors:

"We were out at the IMF meeting in early October meeting the investors, primary dealers who distribute our bonds and the credit rating agencies. Given the debate around whether we would or wouldn't have a credit line had moved into the public domain, we felt safe to air that issue with the market and in fact the markets take on it was relaxed."

Mr Corrigan also said that a change in the ratings agency Moody's view of Ireland would create greater interest among Asian investors in Irish bonds.

 "The big focus is on Moody's where we still remain in sub-investment grade. There is potential for a huge push-on in Irish bond yields if Moody's were to upgrade us," he said. 

The commitment by political parties in Ireland to meet the EU-IMF Troika targets has also been important in selling Irish bonds, the NTMA Chief Executive said. 

"That has been a huge factor, because one of the interesting things about Ireland is that the numbers have played out by and large according to the programme, whereas in other countries  such as Portugal and Spain - which isn't formally in a programme - there have been huge negative revisions to the numbers". 

Mr Corrigan also characterised Ireland's engagement with the markets as "opportunistic" to date.

He said the sale of Irish bonds to international investors next year would be the first sign of 'business as usual' following Ireland's clean exit from the bailout programme. 

Mr Corrigan said the NTMA had enough cash to fund itself until the middle of the first quarter of 2015 and that interaction with the markets next year would focus on pre-funding for the rest of 2015. 

"We would be targeting in terms of our working plan a programme of auctions for next year and we would hope to make an announcement around that for the capital markets sometime in early January.

"The thing is to restore to normal access to the markets  which is normally by way of an auction process and that will be the true sign that it is business as usual at that stage," added Mr Corrigan. 

Keywords: ntma