Deputy McGrath stated: “By raising over €5 billion today and, in particular, by selling long term government bonds, the NTMA has increased Ireland’s prospects of exiting the EU / IMF Programme of Assistance and returning to the bond markets on a permanent basis. However, I think two important points of caution should be noted.
“Firstly, the funds raised have come at a high price. In my view, the yield of 6.1% on the eight year Government bonds does not form a basis of a sustainable return to international debt markets. It should be borne in mind that the blended cost of long term funds available under the EU / IMF Programme is a little under 3.5% at the present time. If we are to end our reliance on official funding, the cost of funds on the markets will have to fall further over the period ahead.
“Secondly, it is clear that following last month’s EU summit, the markets have priced in the Government achieving an overall deal on revisiting the cost of Ireland’s bank bailout. Failure to achieve a deal that meets market expectations will mean the relatively favourable market sentiment towards Ireland will be short-lived.
“The NTMA’s activities on the bond markets today should be viewed as a measured movement in the right direction rather than being heralded as an unquestionable success. The Government now needs to build on the outcome of today’s bond sale and secure a deal at EU level that improves our debt sustainability. The bottom line is that such a deal would enhance our prospects of bringing about economic recovery and making life that bit easier for ordinary Irish people,” Deputy McGrath concluded.