Noonan Says Moody’s May Lift Ireland From Junk in Early 2014

Ireland’s Finance Minister Michael Noonan said he hopes Moody’s Investors Service will raise the nation’s credit rating from non-investment grade as the country exits its bailout program and plans debt sales.

“We’re hopeful that Moody’s will have another look at us early in the New Year,” Noonan, 70, said in an interview with Bloomberg Television in London. “The mood from all the rating agencies is positive at present.”

Ireland is preparing to exit the 67.5 billion-euros ($92 billion) aid program it entered in 2010, after its financial system almost collapsed. Irish government bonds, which slumped as the nation took a bailout, have returned 11.5 percent this year, amid signs the economic outlook is improving.

Moody’s, which gave Ireland its top Aaa grade in 1998 before the euro was introduced, cut its rating on the nation to non-investment grade, or junk, in July 2011 after a real-estate market collapse.

“Moody’s difficulty seems to be with the European Union and the euro zone, rather than with Ireland specifically,” Noonan said. “That’s what they’ve told us.”

A junk rating cuts out some money managers, whose investment criteria stop them buying low-rated securities. Standard & Poor’s and Fitch Ratings, rank Ireland at BBB+, three levels above non-investment grade.

Cash Buffer

The yield on Ireland’s 10-year bonds was little changed at 3.56 percent at 1:30 p.m. London time, leaving the yield difference, or spread, over similar-maturity German bunds at 1.70 percentage points.

Noonan said Ireland will exceed its budgetary targets this year and the government has a cash buffer of more than 20 billion euros.

“We’re in a good place,” he said in a speech after the interview. “We decided to exit the bailout and do it cleanly without any precautionary programs or any dedicated credit lines. We’re not jumping out of the plane without a parachute. We have cash buffers in excess of 20 billion. That funds up to the second quarter of 2015 if we never entered the market.”

Anglo Irish

The Irish government injected 64 billion euros into lenders including Anglo Irish Bank Corp. and Allied Irish Banks Plc. This week, the state sold 1.3 billion euros of preferred shares in another firm -- Bank of Ireland -- to investors at a 4.75 percent premium. That was beyond Noonan’s expectations, he said.

“A lot of people want to buy our paper,” Noonan said. “We’re not junk, we’re doing fine.”

There’s no evidence that the country’s lenders need more capital, Noonan said. He’ll “take time and see” what to do with Ireland’s 99.9 percent stake in Dublin-based Allied Irish, which is probably worth between 5 billion euros and 7 billion euros, he said. He said he’s still “hopeful” on the government’s campaign to win retroactive recapitalization of the banking system.

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