NTMA set to delay bond auction

The NTMA is to wait until after the October Budget and closer to Ireland’s planned bailout exit before embarking on another long-term bond auction, although its successful short-term treasury bill sales will continue.

Speaking at the publication of its annual report, the agency’s chief, John Corrigan, said that decisions on potential bond auctions “will be taken later in the year, in the light of prevailing market conditions”.

While the NTMA has this year raised funds through seven short-term treasury bill auctions (the latest occurred yesterday), its only sale of 10-year/long-term debt, since entering the troika’s bailout programme in late 2010, was with a successful €5bn fundraiser in March.

That auction was viewed as a significant landmark on the road to Ireland’s economic recovery, and a vote of confidence in the country on behalf of the international debt markets.

Ten-year yields/interest rates on Irish government debt are currently at around 3.84%, even better than when the country had a triple-A credit rating.

However, Mr Corrigan said that Ireland has a substantial enough cash balance — with funding in place to the end of 2014 — to argue against tapping the markets again, even at current attractive yield levels, before examining the terms of the bailout agreement and Budget 2014 in detail.

The NTMA did, however, raise another €500m in funding, via an oversubscribed short-term treasury bill auction, yesterday, at a yield of 0.2% (total bids received topped €1.82bn in value) and plans to hold another t-bill auction in September.

“The funding achieved to date in 2013, together with the funds available under the EU/IMF programme, means that — as agreed with the troika — Ireland will have more than 12 months advance funding in place at the end of this year,” Mr Corrigan said.

The NTMA also noted yesterday that the combination of the agreements reached regarding the Anglo Irish Bank promissory note payments and the extension of the maturities on Ireland’s EU loans means that the country will have €40bn less borrowing requirements over the coming 10 years; although this is unlikely to provide Government with scope to ease off on its austerity drive in the autumn.

Furthermore, while noting increased investor confidence in Ireland, Mr Corrigan added that we could remain vulnerable to certain international developments — “as evidenced by the increased volatility in global bond markets, over recent months, driven, primarily, by concerns around the future path of quantitative easing policies”.

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