Irish pension funds and the €24.5 billion ($31.5 billion) National Pensions Reserve Fund, Dublin, could be encouraged or required to buy Irish sovereign debt next year, according to the country’s budget proposal released Wednesday.
The 140-page “National Recovery Plan 2011-2014” states that just 15% of Irish government-issued bonds are owned by domestic investors.
“Irish pension funds have significant assets … but hold relatively little Irish debt,” according to the budget. “Proposals have been made to the government by bodies representing the pensions industry to make certain changes in the legal framework which would encourage pension funds to invest in Irish government bonds.”
The budget also states that the NPRF’s resources will be made available to support the Irish government bond market. “Such a step would be very beneficial to the markets and would demonstrate the government’s willingness to ensure (its own) funding,” according to the budget.
The NPRF’s €6.6 billion of investments in Irish banks, made in 2009 as part of a bailout of the sector, would not be affected by the new proposals, according to the budget.
A request for additional information from the Irish Department of Finance was not returned by press time.