Seventh Treasury bill auction to take place

The NTMA will keep up its engagement with the markets through its seventh Treasury bill auction of the year tomorrow.

The NTMA will offer €500m of bills with a three-month maturity, similar to the last auction in June. This will be the seventh auction of 2013 and, subject to market conditions, will be followed by another monthly auction for the third quarter in September.

In March, the Government issued its first 10-year bond since entering the bailout in Nov 2010.

There has been no issuance of long-dated bonds since March, although the yield at Irish debt has narrowed against the benchmark German bund over that period.

One market source claimed the Government should have taken advantage of the benign backdrop over the past few months to pre-fund the economy for the next three years.

The rationale was that the country exits the bailout in November, but the banks will not be stress-tested until March at the earliest. On the basis that the banks represent the biggest contingent liability for the State, if the country was sufficiently pre-funded, then it would ease investors’ concerns.

Goodbody Stockbrokers econ-omist Dermot O’Leary says the cost of the carry trade would make this level of pre-funding unfeasible. “The aim is to get to a situation that the NTMA can make regular market issuances,” said Mr O'Leary.


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