Ireland making progress towards achieving smooth exit from EU/IMF programme - NTMA Chief Executive
22 November 2012 - Ongoing engagements with international debt markets are essential steps towards Ireland achieving a smooth exit from the EU/IMF funding programme, the Chief Executive of the National Treasury Management Agency (NTMA) said today.
Addressing the Public Accounts Committee of the Dáil, NTMA Chief Executive John Corrigan said Ireland is successfully accessing market-based funding in parallel with the EU/IMF funding programme. This is critical to completing a successful transition to full market-based funding when the EU/IMF programme comes to its scheduled end at the end of 2013.
"We have made very considerable progress in our re-engagement with the markets over the past year", said Mr Corrigan.
"During 2012, our engagements with the debt markets have included bond switches; the issuing of conventional bonds; the issuing of a completely new debt instrument, Irish Amortising Bonds, tailored to meet the needs of the domestic pensions industry; and a return to the short-term debt markets through the regular holding of 3-month Treasury Bill auctions".
Mr Corrigan said Ireland has been successful in addressing the so-called "funding cliff" presented by a scheduled bond repayment of €11.9 billion due in in January 2014, which has been effectively reduced by €9.5 billion to €2.4 billion through a series of long-term capital markets operations during 2012.
"This has been viewed very positively within the investment community and has given many investors greater confidence to lend money to us. Addressing the funding cliff and demonstrating that we can raise funds in the market have been key factors in the continuing fall in Irish bond yields".
Mr Corrigan said the improving market sentiment towards Ireland is illustrated by favourable patterns in Treasury Bill auctions. The yield on the T-Bill sold in July was 1.8%, with demand for this bill running at 2.8 times the amount offered for sale, but the yield on the T-Bill sold this month fell to 0.55%, with demand running at 4.1 times the amount on offer.
But Mr Corrigan said sustainable re-entry to the markets remained dependent on several factors. "Some are within our control, such as the country continuing to meet its commitments to the Troika. Others, particularly those affecting the wider eurozone, are not", he said.
Mr Corrigan also told the Committee:
- The NTMA will continue to engage with investors at home and abroad, presenting the case for investing in Irish Government debt in an open and upfront manner.
- The National Pensions Reserve Fund has taken a lead role in the development and implementation of a number of investment initiatives in Ireland, including the Irish Infrastructure Fund, Innovation Fund Ireland and an innovative agreement with Silicon Valley Bank to introduce new funding to Irish technology companies.
- The State Claims Agency is establishing a specialised Legal Costs Unit to manage third party costs arising from the Mahon and Moriarty Tribunals on behalf of the State.
- The NewERA unit is providing specialist advice to the Government on investment proposals, corporate plans, capital expenditure projects and funding proposals relating to a number of commercial semi-State companies.
- The National Development Finance Agency is currently active in procuring a number of Public Private Partnership (PPP) projects recently announced under the Government's stimulus package. Earlier this month, the NDFA signed contracts for the construction of 8 schools, which will cater for 5,700 pupils when complete and provide employment for up to 1,100 people during the construction phase.