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The head of the Irish Debt Management Agency has issued a stern warning on the country's debt, saying that banking issues should be sold sooner than planned.
The boss of the National Treasury Management Agency (NTMA), Conor O. Kelly, said that we were reaching the peak of the investment cycle and that the risk of a significant drop in the value of the shares was more important at this stage. investors would have preferred the government to have more budget surpluses. Despite the recent economic recovery, Ireland is still in deficit.
"We must recognize how vulnerable we are in the medium and long term while our debt is still so high," said O. Kelly. 19659005] "Things can happen very quickly, the market can reevaluate you very quickly, and this is very expensive and very important when you are as indebted as a country that Ireland continues to be. "
He said that earlier remaining banking issues – 71pc of AIB, 14pc of Bank of Ireland and 75pc of Permanent TSB – begin"
"Squeeze in the markets of the world. Investing to always be there to provide cash can be difficult, "he said.
million. O & # 39; Kelly was speaking while the NTMA was publishing its annual report. The body expects Ireland's annual interest bill to decrease.
But this smaller bill could prove more difficult to fund when the European Central Bank releases its quantitative easing program.
The plan should be terminated at the end of the year – and will mean that Ireland has a smaller pool of buyers for its debt.
million. O & # 39; Kelly said that "this should have a pretty big effect, both on liquidity and on prices". [1 9659021] He also warned about Ireland's reliance on foreign borrowers to cover its financing needs.
"Ninety percent of our borrowings come primarily from international investors, which makes us extraordinarily dependent on international financing of our debt.
" Many other countries have markets much stronger domestic savings and this changes the attitude of investors vis-à-vis a country. The more you are dependent on international markets, the more you can expect things to be volatile. "
Mr. O. Kelly acknowledged that policy makers had more to consider than the opinions of international bond investors, but he said investors' opinions are very important.
" They would prefer that we have budget surpluses, earlier and more, and they would prefer that we pay off the debt on every occasion. "It's a very reasonable position to take for them. importance of their opinion given the amount of debt we have.
"This is not the only thing that policy makers have to deal with, they have a lot of different factors and we totally respect that." But from a borrower's point of view, I suppose we simply recall that investors care about that. "
M. O 'Kelly said that if Irish debt ratios improve, the country's total nominal debt continues to increase as Ireland continues to
"This will limit our ability to absorb future shocks and, as a result, opportunities to reduce debt will become even more important, "he said.
Separately, the NTMA announced yesterday that it would proceed with an auction of bonds. on Thursday when he would seek to raise up to 1.25 billion euros.
Two bonds will be offered – a 10-year maturity with a coupon (or interest rate) of 0.9pc, and another, maturing in 2045, with
the Office of the State Claims (SCA) – the body that handles claims against the state for bodily injury or property damage – falls under the NTMA.
He manages nearly 10,000 ongoing cases, 38 of which are to date as a result of the recent cervical cancer screening scandal
"The Management of these Cases and of D & # 39; Other cases often require exceptional levels of sensitivity, "said the NTMA.
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