Monday, July 30, 2012

Ireland's NTMA Debt Office Chief Sees Need For Bank Debt Deal

Ireland will need some sort of euro-zone deal to relieve its huge banking debts for it to make further progress toward securing a permanent return to capital markets, the head of the National Treasury Management Agency, the country's debt office, said Sunday.

The Irish government last week hailed as a significant step its first sale of long-term debt for almost two years, when escalating bank-rescue costs forced it to embrace an international bailout.

It wants to be the first bailed-out country in the euro zone to emerge from an emergency program when the 67.5 billion euros (83.1 billion dollars) in loans it agreed in November 2010 with the European Union and International Monetary Fund expire at the end of 2013.

It has long said it deserves to "retro-refinance" as much as possible of the 64 billion euros Irish taxpayers injected to recapitalize and pay back private bank bond debt in six lenders since the onset of the country's severe property market crash in 2008.

Ireland last week raised over 5.2 billion euros by selling bonds at an average 5.95% rate, and will "hopefully" sell more debt at lower yields if the country benefits from a deal on the debts it incurred in saving its banks from collapse, NTMA Chief Executive John Corrigan told Irish broadcaster RTE Radio.

"It is important that that relief be forthcoming if we are to benefit from further reduction in yields and ongoing access to the market," he said, without saying how far yields would need to fall before Ireland could permanently sustain long-term market access.

"The mood music in Europe has to improve before you see yields fall very dramatically, but we are very well positioned for that," he said.

Following what they described as a "breakthrough" agreement at a leaders' summit late last month, Irish ministers have said they are confident the euro zone will agree to some sort of deal to refinance a significant part of the country's bank-rescue debts before October.

Government bond investors are pricing in to "a greater or lesser extent" that the euro zone will agree some such deal on Irish bank-related debts, Mr. Corrigan said Sunday.

Write to Eamon Quinn at

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