Bond auction helps ‘rebuild trust and reputation’

The Taoiseach Enda Kenny said that yesterday’s successful auction of €500m in treasury bills by the NTMA was “all part of a process of rebuilding reputation, of rebuilding trust and of demonstrating that as a Government and as a people, this country recognises that it faces challenges itself.”

Yesterday’s auction for the €500m in treasury bills was three times oversubscribed with total bids of €1.5bn. The yield was an extremely favourable 0.70%.

The NTMA dipped its toe back in the market at the beginning of July with a €500m sale of treasury bills followed by two longer-term bond issues over July and August, which greatly alleviated the Government’s debt repayment obligations in 2014.

“When you look at the great work being done by the NTMA, [NTMA chief executive] John Corrigan and his staff, and to reduce the fiscal cliff that we faced in 2014 of €14bn to less than €2bn is quite extraordinary and significant,” said the Taoiseach.

The NTMA has taken advantage of the benign backdrop for the sovereign bond market across the eurozone following a commitment made at the Jun 29 EU Summit to break the link between banking debt and national governments.

Mr Kenny said the Government wants the “maximum” benefit from Europe in a new deal to separate Ireland’s bank debt from its sovereign debt.

The Taoiseach signalled that it may be in Ireland’s interests to wait for a deal to reduce the €62bn in bank debt beyond October or at least until any similar agreement with Spain is sealed.

“If it doesn’t happen before the end of October, the important thing is that the decision be fulfilled. Clearly there are intense discussions going on in regard to Spain.”

He reiterated previous comments by Finance Minister Michael Noonan.

“You don’t want to conclude on a matter that might be better for you to wait a little while longer.

“The importance is that the decision has been made, to separate the bank and sovereign, to review Ireland’s position and we want the maximum out of that when the time is most appropriate,” Mr Kenny said.