HALISTER1: IRISH Underperformance to Continue on Vote Uncertainty: Danske

IRISH Underperformance to Continue on Vote Uncertainty: Danske

(Bloomberg) -- IRISH bonds will continue to lag European peers until there’s more clarity on the political outlook after Ireland’s election provided no clear winner, Danske analyst Pernille Bomholdt Henneberg writes in client note.
  • Spread to EU peers should tighten longer term, as Ireland has solid fundamentals and a modest borrowing requirement for 2016
    • It is though crucial the govt remains committed to fiscal consolidation
  • There’s speculation Fine Gael, the senior partner in the incumbent coalition, and Fianna Fail may set their historical division aside and form a grand coalition
    • Seems unlikely as statements so far don’t indicate either party would like to form a coalition govt
    • Fine Gael could go for a minority government, although this would be a fragile solution
  • NOTE: Fine Gael and Fianna Fail won about 50% of votes in Feb. 26 election; grand coalition appears to be only viable option for stable govt
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Pernille Bomholdt Henneberg (Danske Bank A/S)

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