–Retransmitting Updated Story Published 13:03 ET
–Minister: Move To Help Plug Deficit, Make Irish Mkt More Attractive

LONDON (MNI) – The Irish debt agency is planning to issue
long-dated bonds in January 2011 after the government agreed reforms
that will see the country pension funds able to price its annuities
based on its sovereign bonds, according to the Investment and Pensions
Europe (IPE).

The IPE, a leading international pensions publication, quoted the
Irish Minister for Social Protection, Eamon O Cuiv, who said “the
proposal was voluntary for pension schemes but could help to plug the
country’s deficits and lead to higher returns on Irish debt”.

“It could assist pension schemes wishing to switch to the new
defined benefit model, which is currently under development”, added
O’Cuiv.

The minister said that the funding standard would be amended to
enable pensions schemes that purchase bonds or sovereign annuities to
reprice their liabilities.

Irish pension funds have been using German bonds to match their
liabilities to date, given their longer life cycle as well as the more
reliable credit rating, added the IPE.

“The vast majority of Irish pension funds invest in bonds that are
non-Irish bonds, leading to an outflow of money from the state – money
which would be better invested in Ireland”, said the IPE.

The minister said that there was no risk of Ireland defaulting on
its sovereign debt and that the initiative will assist the Irish
exchequer by bringing pension funds back home at a time when Irish
pension funds hold less than 5% of their assets in domestic sovereign
debt.

Earlier this year, Oliver Whelan, the head of funding & debt
management at the National Treasury Management Agency (NTMA), told an
audience in Brussels that Ireland is exploring the idea of issuing an
inflation-linked bond in 2011.

Speaking at a panel of delegates at the AFME/EDPA European
Government Bond Conference, Whelan said the potential linker issue will
be linked to Irish inflation. This would be Ireland’s first-ever linker
bond and has been brought to the agency’s attention by the industry.

As to the likely maturity, Whelan said, “We will be guided by
investor demand in that space, but you would expect demand from that
sector to be long-dated rather than short-dated.”

Most analysts were anticipating the Irish debt agency to exit the
debt market next year after the European Union and the International
Monetary Fund approved an E85 billion financial support plan for
Ireland.

–London newsroom: 00 44 20 7862 7494; email:nshamim@marketnews.com

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