Ireland aims at bond return

Ireland is hoping for a window of relative calm in the eurozone debt crisis over the coming weeks to make a return to short-term bond markets on schedule and stay there.

In what it hopes will be a prelude to a resumption of long-term borrowing before the €85bn bailout runs out next year, the debt agency reiterated this month that it plans to issue Treasury bills for the first time in almost two years “over the summer months”.

While uncertainty over elections in Greece put paid to any hopes of getting an issue away in June, National Treasury Management Agency officials will be watching market reaction to this week’s EU summit closely to see if the time is right to move.

If EU leaders do not convince investors of their determination to act, at the summit today and tomorrow, another door may have closed for Dublin. “It’s a case of having a window,” said Owen Callan, a senior dealer at Danske Bank, one of 16 primary dealers in Irish debt.

“If we had a week or two of either positive of even neutral sentiment in the market, I think the NTMA would like to issue on the back of that. I don’t think they need things to get particularly better because it would only be a three-month bill.”

Yields on Ireland’s benchmark 2020 bond have been steady at 7.15% over recent weeks, comfortably below yields on Greek and Portuguese bonds. Given all three fellow rescued euro zone members have continued to sell T-bills during their bailouts, Dublin should have few problems.

But the process will have to be carefully timed. Yields on Spanish three-month debt nearly tripled at auction on Tuesday while Italy paid a six-month high to sell two-year paper, underlining doubts that this week’s summit can deliver an answer to the bloc’s debt crisis.

Reuters