American investor stands to make $6 billion profit after backing Ireland’s future
Michael Hasenstab rides against the markets with Irish gamble
An American entrepreneur stands to make a staggering $6 billion profit on his gamble on Irish bonds.
The Sunday Independent reports that trader Michael Hasenstab’s company is in line for the incredible return.
Hasenstab is the star trader at fund manager Franklin Templeton which now owns 10 percent of Ireland’s debt.
The paper reports that his staggering gamble on Irish bonds may return as much as $6 billion in profits.
Hasenstab went against the markets when he invested a whopping $10 billion on Irish debt.
His investment on Irish bonds is the biggest private punt on the country’s future.
Bond analysts have told the Sunday Independent that, subject to certain assumptions, Hasenstab could make as much as $6 billion in profit if he holds the bonds until they mature.
The paper reports that the trader is already sitting on estimated profits of over $2 billion on his Irish gamble.
Ireland’s National Treasury boss John Corrigan has welcomed the presence of foreign speculators in the market.
Corrigan said: “I would prefer if we had 10 Franklin Templetons, rather than one.
“The idea that they could exit in size from before those bonds fall for maturity would be self-defeating.
“Clearly, Franklin Templeton, in their own terms, have placed a big bet, so to speak, on Ireland.”
Bond analysts have told the newspaper that Hasenstab would only net a paper profit of $2.2 billion if he offloaded his entire position this week.
His bonds may have generated coupon payments of up to £350 million according to their calculations.
Writing to Franklin Templeton clients, Hasenstab notes: “I believe the Irish model could be an ideal prescription for problems in the other parts of Europe.
“What has been happening in Ireland is positive. The country, despite facing great adversity, continues to make progress on fiscal reform and is increasingly getting recognition as a model for other countries.
“It can be summarised as a pro-growth and pro-austerity package, where growth is facilitated through structural reforms and competitiveness and austerity is facilitated through fiscal responsibility, which Ireland has put forth and executed well.
“While there is still progress that needs to be made, the fact that Ireland was able to regain (international bond) market access after years of not being able to, is a clear sign that it is getting credit for a lot of the progress it has made.”
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