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Nervous bondholders switch from Irish debt

Nervous bondholders switch from Irish debt

Investors in Ireland’s bonds are sitting on double-digit returns this year after a global debt rally and are now starting to get nervous.

In Ireland’s case, the UK’s political turmoil means a no-deal Brexit could spark worries over credit risks.

So far Irish debt has been relatively immune to Brexit, which has sent the pound and Irish stocks slumping.

“We generally see very little hard Brexit risks priced into Irish government bonds, which is a part of the market that could come under increasing pressure if we head towards a no-deal Brexit,” said Mohammed Kazmi, a portfolio manager at Union Bancaire Privee, which has lowered its exposure to Ireland and replaced it with Spain.

That chimes with views among other fund managers. Anton Nykvist of Nordea was overweight on Irish bonds until late July due to the country’s solid growth outlook and improving debt metrics. But in August Nordea also moved to sell the debt in favour of Spain.

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