NTMA raises a further €400m

THE National Treasury Management Agency (NTMA) raised a further €400 million in short-term funding yesterday, through the auction of five and six-month Treasury Bills.

However, the auction – which benefited from the substantially lower yields (or rates of interest at which the country repays the bonds) associated with T-Bills, in this case 1.9% for the five-month bills and 2.23% for the six-month versions – took place on the same day as yields for Irish long-term bonds rose even further, to 6.58%.

Earlier this week, the NTMA successfully undertook the ninth of its planned 11 long-term bond auctions.

The agency’s monthly bond auction programme has been overshadowed recently as the country’s borrowing costs – basically the rate of interest we’re issuing on the debt – have continued to rise and are now the highest in Europe.

Danish banking group, Danske – which owns National Irish Bank – was the latest of a growing list to promote Ireland in the face of its rising costs, yesterday.

It sees the chances of the Government calling for external assistance as “small”.

“The Government has much credibility tied to solving the current crisis without IMF or EU help, so we believe it would only ask for international help if all other options fail. We, thus find that unless spreads become prohibitive, the likelihood that Ireland will ask for IMF or EU help is small,” the group said.

The ongoing uncertainty surrounding the full amount of state support being ploughed into Anglo Irish Bank continues to concern international investors; even though some overseas commentators have suggested that the continuing take up of Irish bonds shows that markets are confident about Ireland and are using such things as an excuse to demand higher interest rates.

The yield spread between Irish bonds and their German equivalent (which have an average yield of just under 2.3%) have now reached a record high in the lifetime of the single currency.

The NTMA is set to forge ahead with its planned final long-term bond auctions of the year – in October and November – and remains hopeful of a significant narrowing in Irish yields as more clarity is gleaned on the full monetary cost of the banking crisis here and the potential impact of the upcoming budget.

Meanwhile, the Government is reportedly considering allowing Anglo to buy back subordinated debt. The bank has generated more than €1.5bn in profit from previous buybacks.


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