€500m of short-term debt auctioned

The NTMA has auctioned another €500m worth of short-term government debt, albeit at a marginally smaller interest rate.

The latest NTMA sale of three-month treasury bills — the agency’s eighth such auction this year — was linked with an annualised yield of 0.18%, slightly down on the 0.2% rate that bills were sold at in auctions in June and July.

May’s ‘T-bill’ auction drew a yield of nearly 0.13%, which was the lowest since these auctions were resumed in Jul 2012.

However, with total bids amounting to over €1.67bn, the latest auction was more than three times oversubscribed and was viewed as a further strengthening of Ireland’s trustworthy status.

“Today’s T-bill auction is an important way of interacting with international investors as Ireland looks to exit the troika financial support programme in the coming months,” said Owen Callan, senior fixed income strategist at Danske Bank Markets.

“It also forms part of the NTMA’s plans to continue to build up the T-bill programme next year and offer Ireland cheap access to large amounts of short-term financing.”

Mr Callan expects the NTMA to return to a monthly issuance of longer-term debt during the final quarter.

“This more regular supply of liquidity should allow for more predictable and consistent market depth and bid/offer spreads in the Irish bond market, creating better trading conditions for investors and encouraging them to increase their participation in it.”

He said yesterday’s auction results “underscore the continued demand for Irish government securities from international investors and bodes well for these monthly auctions when they do begin again”.

The NTMA’s first 10-year bond auction since the bailout programme commenced in late 2010, raised €5bn last March.

Although yields on long-term government debt have been at attractive levels, the NTMA said since the country has a substantial cash balance and funding in place to the end of 2014, there would be no need to tap the markets until after the budget and the terms of the bailout exit are clearer.