WSJ:Ireland's Market Return Pivots On Resolving Wider Euro Crisis-NTMA
DUBLIN (Dow Jones)--The head of Ireland's debt office, the National Treasury Management Agency, said Friday that Ireland is winning over investors with its adherence to its bailout program, but that resolving the wider euro-zone debt crisis remains "critical" for getting the country back to market funding.
Ireland's government has been in a bailout program with the European Union and International Monetary Fund for just over a year and has pledged the country will return to markets in a phased manner in 2012 before securing full funding by the time the EUR67.5 billion in bailout loans runs out in late 2013.
But the NTMA's John Corrigan said while Ireland is "gaining credit" for its handing of the bailout program, the euro-zone debt crisis continues to roil investor confidence in the country.
"A resolution of the wider euro-zone sovereign debt and banking crisis is critical to restoring investor confidence and positioning the NTMA for a return to markets," said Corrrigan.
The NTMA plans to step up its investor road shows in Europe, North America and Asia next month, but the timing of Ireland securing short-term debt funding and then tapping long-term debt will depend on "both national and international factors," he said.
Some economists have predicted that Ireland will fail to recover substantial market funding before a major bond repayment falls due in early 2014. They have urged the country to immediately start talking to its bailout lenders--the EU, the IMF and the European Central Bank--about a second bailout program.
But earlier this week, Irish Finance Minister Michael Noonan said such talk of a second bailout is "ludicrous."
Amid a disastrous banking crisis, Ireland was forced to borrow the EUR67.5 billion of international loans when markets effectively refused to lend the country more money. The bailout required the Irish government to inject billions of euro more--from its own resources--to recapitalize its banks and to introduce a series of tough austerity budgets to cut the country's spending deficits by 2015.
In the NTMA's annual statement, Corrigan reiterated the Irish Finance Ministry's forecasts that Irish debt will peak in 2013 at about EUR200 billion, equivalent to 119% of Irish gross domestic product, and decline thereafter.
Yields on benchmark 10-year Irish debt spiked last July to 14.1% when ratings agency Moody's Investors Service Inc. demoted Ireland's bonds to junk status. They then fell to 8.3% by the end of the year following a cut in interest rates on Ireland's bailout loans and have since settled at 7.5% in recent days, he said.
