NTMA to hold €500m auction

The National Treasury Management Agency is taking advantage of the benign conditions for government debt by issuing €500m in three-month treasury bills (T-bill) tomorrow.

The T-bill auction follows a series of government bond issuances over the summer, which has greatly eased the €8.2bn funding cliff the economy faced in Jan 2014.

The NTMA successfully issued a €1bn amortising bond in late August and in July, the agency completed a €5.23bn bond swap.

There has been a significant easing in government bond yields over the past four months on the back of wider eurozone events. In June, EU leaders promised to break the link between the sovereign and the banks across the region.

This has raised expectations that plans for an EU banking union will include proposals for a deal on Irish bank debt, either through a refinancing of the €28bn in promissory notes relating to Anglo Irish Bank or possibly through the European Stability Mechanism taking an equity stake in Irish banks.

The easing of yields has fed through to the corporate bond market. Last week, the ESB issued a €600m five-year bond, which over four times oversubscribed.

On Monday, the IMF urged EU leaders to follow through on the Jun 29 commitments because it would help Ireland make a full return to the bond markets.

But there is growing opposition in Germany and other creditor nations to a deal, which could scupper the government’s chances of securing relief on the €64bn that has so far been pumped into the banks.