Annuity bonds could mean a ‘win-win’ scenario for funding

The National Treasury Management Agency’s (NTMA) decision to issue annuity bonds could be a ‘win-win’ scenario for the Irish Government’s funding requirements and the Irish pension fund industry,according to global strategist with Davy Stockbrokers, Donal O’Mahony.

“There are clear incentives now in place for a sizeable asset reallocation of domestic pension funds to Irish Government debt, this from the starting point of virtually non-existent exposure.

“Irish debt management agency targeting €3bn to €5bn in related issuance over the next 18 months is a conservative estimate in light of improving sentiment regarding Irish sovereign risk,” said Mr O’Mahony in an extensive report, titled, ‘Irish solution to an Irish problem?’. Annuity bonds make principle and interest payments over the course of their 35-year lifespan.