August saw the Standard and Poor rating agency downgrade the Irish sovereign debt from “AA” to “AA-“ and their outlook for the rating (not the economy) is negative. This followed a similar move from Moody’s earlier in the month. S&P cited the rising cost of the banking bailout as the reasoning behind this downgrade, in their statement and projected a debt-GDP ratio of 113% in 2012.

However their negativity seemed to be slightly contradicted by the Government bond sale which took place in early September after the downgrading by S&P. The National Treasury Management Agency sold €600m of Irish treasury bills, €200m of which are due February 14, 2011 at an average yield of 1.978pc, 48 basis points lower than at the August 12 sale, and €400m due on April 18, 2011 with an average yield of 2.348pc, down 46 basis points. Both securities were oversubscribed.

Only last week, the Government once again unequivocally ruled out any change in the 12.5% Corporation tax rate stating that it was a cornerstone of the Irish industrial policy.

There has been a lot of activity also in the funds area with Life Settlements fast becoming the most popular asset class for new funds. A lot of interest has been shown by overseas originators and at the time of print a number of transactions were going live. We have an extended article in this e-shot explaining in more detail why Life Settlements are becoming so popular as an asset class and the life settlements market in general.

Regards,