Credit rate upgrade desirable, says NTMA

An upgrade of Ireland's sovereign credit rating by Moody's would make it easier for the National Treasury Management Agency to sell government bonds in Asia and reduce the interest rate paid by the country on this debt, the NTMA's chief executive John Corrigan said yesterday

“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.”

Mr Corrigan said every 0.1 per cent reduction in the yield on Irish bonds would save Ireland €6 million next year. Ireland's benchmark 10-year bond was yielding 3.503 per cent on Friday, down from pre-bailout highs of about 14 per cent in July 2011.

Regular bond auctions
Speaking to RTÉ's This Week radio programme, he said Ireland was fully funded to the middle of the first quarter of 2015. The NTMA had raised €7.5 billion this year in an "opportunistic" way, Mr Corrigan said, and the goal was to return to regular bond auctions. It would announce plans for a full return to global debt markets in January.

Mr Corrigan’s comments came just days after the Government announced it would not be seeking a precautionary credit line when the State exits its International Monetary Fund-EU bailout programme on December 15th.

He said the sale of bonds to international investors next year would be the first sign of a return to normality.

'Business as usual'
"The thing is to restore 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."

The NTMA chief had previously expressed his preference for Ireland to have access to a precautionary credit line when it left the bailout. On RTÉ television on July 18th, he said it would be a “very valuable safety net” for the State. Yesterday, he said international investors were not worried about this safety net.

“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 market’s take on it was relaxed.”

He also expressed the view the decision would not rule us out from future bond-buying programmes by the European Central Bank.