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Are International Bondholders safe taking a punt on 4 year Ireland bonds?


Con Gallagher

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Joined
May 25, 2010
Messages
2,413
Are International Banks safe taking a punt on 4 year Ireland bonds?

What should buyers of 4 year bonds consider before putting (other peoples') money into Ireland?
NTMA to tap bond markets · Business ETC


Firstly, the positive track record:
- no senior Bondholder for banking debt has been left behind
- the troika is still in town for another few months to oversee the natives
- the permanent government will modestly propose the eating of children before the State defaults on sovereign debt.
- the recent overhyping of oversubscription for purchase of bills not over 3 months.

Secondly, the current state of play
- a deficit of €14bn being celebrated like it's 2009
- current plan is to have deficit to be 120% of GDP (growth has not met forecasts in at least 5 years)
- stability in government with same policies being pursued from September 2008 to present.

Thirdly, the problems coming down the tracks:
- years of austerity (excluding the Public Sector pay and pensions , headline SW rates and tax rates as they were electoral promises) to come, thereby dampening domestic demand of all taxpayers
- interest rates to rise from 0.5% causing thousands to default on mortgage, to cause banks to be further recapitalized thereby depleting monies available to repay bonds acquired by 2017 when tomorrows bond falls due
- long term problems such as huge hole in ability of State to pay State pension (as if), effect oil price increases on an island nation dependent on car travel, emigration and lower birth rate from 1990 reducing workforce/tax payers
- the euro crisis and risk of its breakup and being repaid in punt nua
- the risk of SF being in government after a 1915/16 election and keeping its promise to say not to put another (red) cent in banks, thereby making the leap to sovereign default being much smaller.


If you were an international Bank/bondholders would you take a punt on Ireland?
 
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leftsoc

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Mar 8, 2005
Messages
2,848
"current plan is to have deficit to be 120% of GDP (growth has not met forecasts in at least 5 years)
"

Why is debt/GDP ratio always used when it is accepted that GNP is correct measure for this little tax haven? What is the debt/GNP ratio scheduled? 150% ? is that not accepted as unsustainable?
 

Trainwreck

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Sep 6, 2012
Messages
26,809
"current plan is to have deficit to be 120% of GDP (growth has not met forecasts in at least 5 years)
"

Why is debt/GDP ratio always used when it is accepted that GNP is correct measure for this little tax haven? What is the debt/GNP ratio scheduled? 150% ? is that not accepted as unsustainable?
The answer to your second question is indeed 150% (though as you observe we will miss that on the bad side).
The answer to your first question is contained in your last question.

Though I suspect you knew that.


While the Irish media jump around ****-a-hoop about "getting back into the market" and "only" 6%, know that in the wider world of financial markets all risk premia have come plummetting down over the last 2 years - dare I say, a la 2006.

Lots of free money metaphorically chasing anything in a skirt, with rapidly and ever declining discriminaton.
 

Iphonista

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Jun 6, 2012
Messages
4,200
I'm really worried about international bondholders. I'm on the brink of tears here.
 
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EUrJokingMeRight

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Sep 28, 2009
Messages
11,840
Short term bonds-yes, long term bonds...no fcu**ing way josé!!
 
B

Boggle

Hard to know.

Personally, I'd still be worried that we haven't things under control and the fact that no bondholder has taken a cut YET would be a worry because I wouldn't want to be the one who gets caught.
If we had already sorted out the debt with the appropriate write downs I'd be more at ease though either way I'd be nervous.

Things do feel as though they have stabilised though and that is to be welcomed. Whether I am falling for spin or interpreting what I see is open to debate though.
 

Bud Light

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May 10, 2010
Messages
901
Nothing for an investor to worry about - the War Cabinet have told us everything is fine!! Probably expect that the economy will take off like the rocket Noonan told us about some time back.
 

Telemachus

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Apr 8, 2004
Messages
6,565
Website
en.wikipedia.org
[video=youtube;Av8AbVjcBMk]http://www.youtube.com/watch?v=Av8AbVjcBMk&feature=player_embedded[/video]

Remember this guy? 26th Sept 2011. Worth a look lads.

He said the bonds and the USD were the only things that were looked favourably upon by traders and you are seeing the rally now. Maybe he was just coming down of a bad dose of drugs but he seems prescient.

Gold and Silver have been knocked down to the €1200 and €21 level. This seems to be a second wind period in the depression with. A false hope.

Remember f**heads the govt can dip into your bank accounts now. It was on the radio today re: property tax.
 
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stopdoingstuff

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Feb 26, 2011
Messages
22,897
Totally safe. The ECB said they will print if necessary, so there is no risk in nominal terms. That's not to say the money you would get under those circumstances would be worth as much as the money you put in, but it would be the same in nominal terms.
 
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