Financial Aid To Ireland 'unavoidable', Investment Manager Says News Investment 18471455

Financial aid to Ireland 'unavoidable', investment manager says
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Financial aid to Ireland ‘unavoidable’, investment manager says

18 November 2010 / by Paul Dicken

A fund manager has described the provision of financial aid to Ireland as ‘unavoidable’, as the country is visited by European and international experts to assess its banking sector.

Peter Geikie-Cobb, who manages a global bond fund at Thames River Capital, part of F&C Investments, said Ireland – which has denied it needs external financial support at this stage – could be in denial about the full severity of the situation it faces.

“They believe that they have enough funding to see them through to the middle of next year and that they will be able to grow their way out of the problem. However, the reality is that as the economy falters their debt to GDP ratio continues to increase.

“Furthermore as markets being to prove in defaults, they will be forced into a classic debt trap as market interest rates increase.”

Geikie-Cobb added: “It’s quite clear to us that financial aid is unavoidable and the ultimate end game will see bondholders being forced to take a haircut, bearing the brunt of the restructuring and refinancing.”

He said there was a lack of market credibility while there was no agreement between Ireland, the European Central Bank and EU on spending cuts and restructuring going forward.

Ireland has come under increasing pressure in Europe to request a financial support package as the cost of borrowing for the Irish Government has risen sharply and concerns have increased about the government’s ability to meet its funding requirement next year.

Speaking in the Dáil, the Irish parliament, on 18 November, Irish finance minister Brian Lenihan said if a ‘substantial contingency capital fund was made available to back Ireland’ but not necessarily accessed, that would be a very desirable result of the talks going on. He also reassured customers of Irish banks, saying that ‘all deposits continue to be safe and secure’.

In a statement on 17 November, José Manuel Barroso, president of the EU Commission, said he had confidence in the Irish government’s fiscal plans but it was addressing a ‘very specific problem as far as the banking sector is concerned.’

“In this context, the Irish authorities are committed to working with the Commission, ECB and IMF [International Monetary Fund], to determine the best way to deal with market risks, especially as regards the banking sector. That was the message we’ve got just yesterday in the Eurogroup,” Barroso said.

He insisted no pressure had been put on Ireland to resort to ‘the financial assistance mechanism’ but reiterated the message that the EU financial support mechanism was available if requested.

The Irish Government confirmed talks would begin today, 18 November, with the purpose of the meetings looking at the ‘structural problems’ in the Irish banking sector, with intensive engagement to see how these could be addressed.

UK Chancellor George Osborne was reported on 17 November saying Britain would be willing to provide billions of pounds in financial support to Ireland, in the event that a financial aid package was sought.

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  Product Name ISA Option Income Yield More Info
Henderson Strategic Bond yes 5.7% More Info >
Income Paid Quarterly. Investing in higher yielding assets which will include most types of fixed interest securities, this fund aims to deliver a quarterly income to investors. See latest fund factsheet for details.

Newton Asian Income yes 5.43% More Info >
Income Paid Quarterly.The objective of the Sub-Fund is to achieve income together with long-term capital growth predominantly through investments in securities in Asia Pacific ex Japan (including Australia & New Zealand) region. The Sub-Fund may also invest in collective investment schemes. See latest fund factsheet for details.
Newton Higher Income yes 5.4% More Info >
Income Paid Quarterly. The objective of the Fund is to achieve increasing distributions on a calendar year basis with long term capital growth. The Fund may also invest in collective investment schemes. See latest fund factsheet for details.

Invesco Perpetual Distribution yes 4.7% More Info >
Income Paid Monthly. Invesco Perpetual Distribution offers a balance between both income and capital growth through investment in UK based equities and fixed interest securities. See latest fund factsheet for details.

Invesco Perpetual Monthly Income Plus yes 4.46% More Info >
Income Paid Monthly. Popular income fund that aims to achieve a high level of income whilst seeking to maximise total return through investing in high yielding corporate and Government bonds, together with UK equities. See latest fund factsheet for details.

Woodford Equity Income Fund yes 3.50% More Info >
Our selected partner for investing in Neil Woodford’s Equity Income fund is Barclays Stockbrokers, via their INVESTMENT ISA for new ISAs and ISA transfers, or their MARKETMASTER® ACCOUNT for non-ISA investments. Income Paid Quarterly.The fund’s investment objective is to provide investors with long-term appreciation through investing in stocks primarily listed on the UK stock exchanges. Up to 20% may be invested in international companies. The income objective is 10% higher than the FTSE All Share Index yield with an anticipated annual yield of 4.0%.
Newton Global Higher Income yes 4.7% More Info >
Income Paid Quarterly. The objective of the Sub-Fund is to achieve increasing annual distributions together with long-term capital growth from investing predominantly in global securities. The Sub-Fund may also invest in collective investment schemes. See latest fund factsheet for details.

Jupiter Merlin Income Portfolio yes 3.10% More Info >
Income Paid Quarterly. To achieve a high and rising income with some potential for capital growth by investing predominantly in unit trusts, OEICs, Exchange Traded Funds and other collective investment schemes across several management groups. The underlying funds invest in equities, fixed interest stocks, commodities and property, principally in the UK. See latest fund factsheet for details.

M&G; Global Dividend yes 3.27% More Info >
Income Paid Quarterly. The Fund aims to deliver a dividend yield above the market average, by investing mainly in a range of global equities. The Fund aims to grow distributions over the long-term whilst also maximising total return (the combination of income and growth of capital). See latest fund factsheet for details.
Kames Strategic Bond yes 2.95% More Info >
The primary investment objective is to maximise total return (income plus capital ) by investing in global debt instruments,denominated in any currency, ranging from AAA Government Bonds through to high yield and emerging market corporate bonds. At least 50% of the fund will be invested in sterling and other currency denominated bonds hedged back to sterling. See latest fund factsheet for details.

M&G; Optimal Income yes 2.44% More Info >
Income Paid Twice Yearly.The fund aims to provide a total return to investors based on exposure to optimal income streams in investment markets. The fund invests across a broad range of fixed income assets according to where the fund manager identifies value. See latest fund factsheet for details.

*Current Income Yields are Gross, Variable and Not Guaranteed
**Historic Yield reflects distributions declared over the past 12 months as a percentage of the mid-market price of the fund.
*** This is the target yield the fund aims to achieve per year, it is not guaranteed and could change according to prevailing market conditions. The target yield is net of basic rate tax.
Information correct as at 08/02/2012.

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Written by Editorial Team