Central Bank may up bond sales

The Central Bank may sell more of its holdings of the country’s bonds than scheduled this year, as yields on Irish benchmark notes hover at record lows, according to sources.

Last year, the State gave the Central Bank €25bn of government bonds, as part of a plan to push out the cost of bailing out Anglo Irish Bank. The bank, which planned to sell at least €500m of the notes by the end of this year, may offload more.

The Central Bank was handed the bonds to replace promissory notes, a form of shorter-term IOU, used as collateral for emergency funding which averted the collapse of Anglo Irish Bank. Selling bonds may help appease the ECB, which said last month that the Irish accord raises concerns as the region’s central banks are banned from financing governments.

Central Bank spokeswoman Maeve McLaughlin declined to comment.

The Central Bank said on Tuesday it sold €350m of government bonds in 2013, leaving another €150m to be sold to reach its minimum target by the end of the year.

Governor Patrick Honohan declined to say at a press conference in Dublin whether the bank had sold any further securities this year.

Mr Honohan said he would only announce the bond sales once a year, when the organisation released its annual report. The Government is liquidating Anglo, renamed IBRC after it was nationalised.

In 2013, the State paid the Central Bank €943m interest on about €43bn of state securities used to refinance its emergency Anglo funding. Ultimately, much of the interest flows back to the Government, as the bank pays a dividend to the State.

John Corrigan, head of the NTMA, said on April 15 the Central Bank should stick to the agreed bond sales programme unless there is a “significant” improvement in the economy.

— Bloomberg