Ireland will go ahead with “a serious sale” of 10-year government bonds before the end of June that will be a major test of the country’s ability to fund itself on the international markets, Minister for Finance Michael Noonan has said.
The International Monetary Fund, he said, is prepared “to hold our hand” as Ireland readies to exit the bailout programme, said Mr Noonan, during a briefing for investors at Bloomberg’s European headquarters in London.
“What would suit us best is a menu of back-stop measures which we wouldn’t have to use, which would be back-stops that would encourage the market to lend to Ireland at low interest rates,” he declared.
Earlier, he voiced confidence that other EU states will agree that Ireland should get back some of the money that had to be invested by the Irish taxpayer to save Ireland’s banks: “I think Ireland has a very strong case. While some of it was our own fault, a lot of the action was taken at the direction of the European Central Bank to prevent contagion spreading to the European banking system. As Ronald Reagan used to say, ‘We took one for the team’,” he told Bloomberg TV.
Pleasantly surprised
Mr Noonan said he was pleasantly surprised by the markets’ reaction to this month’s promissory note deal: “I thought the expectation in the market was that we would get a deal. But, obviously, there was a market surprise when the full deal was announced.”
“[At] some point probably in the first part of the year we will need to have a serious sale of Irish long-term paper. Nine-year was our traditional paper on the long-term side. Everyone else seems to be issuing 10-year [bonds].
“The issuance will be 10-year in line with everybody else. That will be one of the serious tests of market conditions,” said Mr Noonan, who met with a series of bond investors during the course of the day.
‘Hand-holding’
“We are told by the IMF that there is always a bit of hand-holding to get countries out of programmes, and they are prepared to hold our hand but I would like that we would be back into the markets fully by 2014,” he said.
Mr Noonan deliberately made no attempt to avoid the challenges, noting that Ireland’s description as “the best boy in the class” would not impress Irish voters: “My constituents wouldn’t be too impressed with anything I have said. There is austerity-fatigue all across Europe. While the Irish aren’t on the streets to any great extent we are not immune from austerity fatigue either. People want to see tangible results for the sacrifice that they are making,” he said.
Asked what is keeping him “awake at night”, Mr Noonan replied: “I would be concerned until the Cyprus situation is resolved in the next couple of months. I would be interested in what the solution is there.”
For the first time, bank creditors are facing wipe-out – an outcome that is small in financial terms – €10 billion approximately, but which euro zone leaders refused to countenance in Ireland’s case, or, indeed, for Greece, Spain, or Portugal.
