Swiss bonds move no problem

THE blacklisting of Irish bonds for use as collateral by the Swiss Central Bank “has no serious funding implications for Ireland, said Alan McQuaid, chief economist, Bloxham Stockbrokers.

It follows the rejection of Greek bonds by the same bank several months ago, but in practical terms it “has no consequences for funding of Irish debt in the current environment.”

It highlights the fall from grace of the Irish and probably does further damage to “the perception of the Irish abroad”.

In effect, we join the Greeks who received a €110bn bail out package from the EU in early May 2010.

Their bonds fell out of favour shortly after the bailout terms were agreed, McQuaid said.

What count’s in today’s troubled environment is that the ECB has made clear its commitment to support the troubled banks that fall within its remit as a central bank.

It emerged yesterday that European investors bought almost three quarters of the €5 billion in bonds sold by the EU to finance the €85bn aid package for Ireland, said Bloomberg.

Europe accounted for 71.5% of the five-year bonds, the European Commission said.

Asia represented 21.5% and the Americas 6%.

Central banks and other “official” institutions represented 38.5% of the allocation, while fund managers bought 24.5%, banks 22% and insurance and pension companies 12%.

The issue was the first by the commission through its European Financial Stabilisation Mechanism as part of its €22.5 billion share of the €85bn Irish bailout.

The interest rate on the loan to Ireland as a result will be 5.51% and the funds will be handed over on 12 January.

In a separate development the Central Bank of Ireland confirmed speculation it has hired Barclays Capital to assist it in its Prudential CapitalAssessment Review (PCAR) and Prudential Liquidity Assessment Review (PLAR).

Boston Consulting Group and Blackrock have also been called in by the bank to assist it in its latest assessment of the banks.