First long-term bond to be issued since crisis

Ireland is planning its first long-term bond issue since the financial crisis using the European bond-buying programme as a safety net.

Finance Minister Michael Noonan said that he plans to oversee the sale of a 10-year bond in the first half of this year. The Government is issuing the bond in order to qualify for the ECB bond-buying programme, known as Outright Monetary Transactions, that requires two long-term bond issues, but Mr Noonan said that this facility will only be used as a backstop.

“I don’t think we’d apply to avail of it,” he said. “We’d apply to use it as a backstop so that we could access the market, so that lenders would know that it’s there,” he told Bloomberg TV.

Davy chief economist Conall MacCoille said this would be first issue of a new bond that the NTMA had engaged in since the crisis began. Ireland’s previous bond issues had been tap issues, which allowed the Government to sell bonds from past issues in order to raise money with the interest rates and benchmarks already established.

“It is certainly a significant moment, but we won’t be talking about it in six months’ time. It is significant, but by no means a game changer,” he said.

Mr MacCoille said that Ireland has been issuing eight-year bonds at 3.6% and he couldn’t see any reason why the NTMA would not get a new 10-year bond away at similar rates.

Mr Noonan also repeated his claims that Ireland will be treated as a special case when it comes to the enactment of the European Stability Mechanism (ESM).

“I think Ireland has a strong case because part of the intervention which put the burden of the bank debt, 40% of GDP, on the shoulder of the Irish taxpayer, some of it was our own fault, but some of the action was taken at the direction of the ECB, to stop contagion spreading to the European banking system,” he said.

Retroactive access to the stability mechanism could result in a saving for the country in that it would restructure about €30bn of debts and possible regain an investment-grade rating from the ratings agency.

Mr Noonan said that the statements from both the French president François Hollande and German chancellor Angela Merkel, that Ireland was a “special case”, is shorthand for the fact that the country will be allowed to access the ESM fund to cover our banking debts.

The final issue that Mr Noonan addressed was the liquidation of iBRC and he dismissed any suggestion that the deal could be unravelled or challenged successfully in the courts.

“I don’t expect any challenge from any authority or institution in Europe. Individuals frequently take cases, we have a string of them in the courts all the time. They don’t go very far.”