Dáil Éireann Debate, Thursday - 17 May 2012
50 Deputy Michael McGrath asked the Minister for Finance if he will give consideration to a proposal relating to the issuance of Government bonds (details supplied); and if he will make a statement on the matter. [24727/12]
Amharc ar fhreagraTogether with the NTMA, my Department is open to proposals relating to the issuance of Government bonds that would allow Ireland to return to the international debt markets in a sustainable manner as soon as possible. Turning to the Deputy's question, I am informed by the NTMA that investors in Irish Government bonds legitimately expect that tax receipts form a substantial part of the revenue stream to meet Ireland's debt obligations as they fall due. Such investors rank "pari passu" (i.e. equally amongst themselves) and would not expect investors in tax backed bonds to be granted a preference in terms of payment obligations, particularly if any significant volume were to be issued.
Furthermore, even if tax backed bonds were to be issued at a lower yield, an increased cost may be demanded from other bond investors who would not have been offered similar terms and who would have to rely on a potentially diminished pool of revenue streams to cover the obligations due to them. Due to current market conditions, investors are reacting very negatively to any perceived or potential future subordination of their claims. The uncertainty caused by the widespread introduction of tax backed bonds could be expected to lead existing investors to reduce their holdings of Irish Government bonds, thus adversely affecting the yields on all new issues of Irish Government debt.
