EFFAS: Ireland is the best bet
It would appear that a certain level of confidence has returned to bondholders in relation to the Irish situation. Investors are betting that Ireland will recover and grow its way out of the crisis while Portugal and Greece will continue to slide further.
There was a 14% return on investment for anyone brave enough to bet on Irish securities over the last three months, according to reports compiled by the European Federation of Financial Analysts Societies (EFFAS) and Bloomberg. It is showing the best recovery of all the nations that received a bailout from the EU and the IMF, with its 10 year yield trading at 2 points less than the three month average.
“The economy has growth potential while the other economies don’t. That’s one of the biggest problems for Greece and Portugal”, according to Kornelius Purps at Unicredit.
“My perception is, and always has been, that the situation in Ireland is more manageable than in all the other tricky countries”.
Bondholders are taking the chance that Ireland’s export-led growth will continue and are betting accordingly on us succeeding. It is widely regarded that Ireland is in the best position to come out of this crisis and maintain a healthy growth, while Greece and Portugal are forecasted to sink further into recession, despite savage austerity measures already taken by their governments.
Investors have already lost 2.2% and 1.5% respectively on Portuguese and Greek debt, which makes profit on Irish securities a very attractive proposition. The message seems to be to be loud and clear: if you want to get on a winner, get on Ireland!