Bailout partners consider exit strategy

A precautionary credit line proposal may be one of the items explored by the nation’s bailout partners as they consider transition arrangements for the nation’s exit from its rescue program, the head of the National Treasury Management Agency (NTMA) has said.

Yesterday, John Corrigan told the Public Accounts Committee: “The Minister for Finance did say that he’d invited the Troika to prepare a paper on transition from the programme to the post-programme. Presumably one of the items in the paper could be a credit line.” The Troika are committed to producing the paper “towards the end of the year, early January”, he said.

Mr Corrigan said the NTMA has an “open mind” on whether to sell a syndicated bond in US dollars or in euro as the agency aims to raise about €10 billion of market funding.

He said that Ireland now has bond yield rates in “absolute terms” that are lower than they were when the country had a Triple-A rating.

He said there was increasingly positive sentiment towards Ireland reflected in the sale of recent three-month treasury bills which attracted a yield of just 0.55 per cent and was oversubscribed by a factor of four.

Ten-year yields were 14 per cent last year and two year yields were 22 per cent. This year the equivalent yields are sub 5 per cent and 2 per cent.

Mr Corrigan said the NTMA had not factored in a deal on bank debt when it has been involved in discussions with investors. He estimated that Ireland’s debt repayments in cash will be €5.7 billion this year and €7.25 billion next year, more than twice the amount due to be taken out of the budget in cuts.