Credit rating agency Moody's said the launch of the National Asset Management Agency has made it easier to determine where Ireland's rating will settle.
'Ireland's National Asset Management Agency (NAMA) is an ingenious mechanism - with several successful historical precedents in other countries,' Moody's said in a statement.
It added, however, that NAMA was a 'balancing act' for the public finances.
'We have interpreted the NAMA idea rather favourably since it was first floated,' said Moody's, which rates Ireland AA1 with negative outlook.
'As the government's debt trajectory has now become clearer with the decisions on NAMA transfers, Moody's is closer to determining at what level in the Aa rating range the government of Ireland's ratings are likely to settle,' it said.
Meanwhile, a spokesman for the International Monetary Fund has said the transfer of assets from the banks to NAMA represents an important step to help the country's financial sector recover. 'The Irish Government's extensive and ongoing support, we feel, has been vital to maintain financial stability,' IMF spokesman Gerry Rice told reporters in Washington.
NAMA to spend less on loans
The National Asset Management Agency will spend €40-50 billion on buying property loans from the country's financial institutions, Central Bank Governor Patrick Honohan said today.
The estimate is below the Department of Finance's initial €54 billion projection. NAMA this week started buying property loans from banks at a higher discount than expected.
'The loans are being bought at quite deeply discounted rates, reflecting the sharp fall in property prices since the biggest and most problematic of the loans were made some years ago at the height of the bubble,' Professor Honohan said in an opinion-editorial piece in today's Financial Times.
'The pricing has been designed with the objective of enabling NAMA to recover its substantial outlays - between €40 billion and €50 billion - over the coming decade,' he said.
NAMA is buying the first batch of loans with a book value of €16 billion at a 47% average discount. At the lower end of the spectrum mentioned by Mr Honohan, NAMA would be paying less than half the book value of the €81 billion of assets it is taking over.
Professor Honohan reiterated that the banks, which include Bank of Ireland and AIB, will sell 'non-core' assets, issue new shares and see the Government's preference shares from an earlier bailout converted into ordinary equity.
'Just as has happened with Lloyds and Royal Bank of Scotland in the UK, the banks are to be managed with a view to commercial performance and the realisation of the best value for the taxpayer when the equity stakes are sold back into the private sector,' the Central Bank Governor said in the newspaper.
The Government has injected €12 billion into nationalised Anglo Irish Bank, and said another €10 billion could be needed. Professor Honohan said it was 'likely' the €10 billion would be necessary.
'This is a truly shocking figure, albeit one that is affordable for the state,' he stated.
