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THE NATIONAL TREASURY Management Agency has completed an auction of Irish Treasury Bills, selling the target amount of €500 million.
The total bids received amounted to €1.822 billion, almost 3.6 times the amount on offer.
The Treasury Bills, which have a maturity of three months, were sold at an annualised interest rate of 0.12 per cent – lower than the 0.19 per cent the bills were sold for in April.
A three-month maturity to 19 August was offered on the bills.
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Great more monies We can now give to Our existing bondholders
It is indeed great… We can now repay debt we borrowed at 4-6% interest circa 2008 with new debt we borrowed at .12%
That’s not really the case Andrew, we borrowed long term debt at 6-7% and these low yield bonds are low yield as they only have a three month maturity. To use T-Bills to roll over long term debt would require new issuances every three months to keep the debt rolling. For 10 year debt the 0.12% you mention would actually be 4.914% (compounded 40 times). This is still lower than issuing 10 year notes, but that is because the risk to the issuer is increased.
More importantly however, would be the lack of stability of trying to use T-Bills excessively for funding. 10 & 20 year debt has higher yields as risk increases with time. However, if you can get the cash you will need for the foreseeable future at a set rate that will hold (for you, if not on secondary markets) for 10/20 years then you have stability and can plan or the future. If you have to go back to the markets every 3 months, one bad auction could be disastrous.
More invisable money….yawn
I wouldn’t say invisible it tends to get took from our pockets one way or the other so yes it’s invisible in the sense it has disappeared out of us ordinary joes bank accounts to pay off some bond holder that should of been burned but saying that Ireland would have to wait a lot longer to get money off markets if they had done that, it is getting complicated :) or worse ,all i know is I’m down at least 100 euro a week compared to last year and nearly 200 compared to 2010 . This is depressing and I think this was supposed to be a good news story ,what a bloody joke ,pity us ordinary folk ain’t smiling
I wouldn’t say invisible either. We have to borrow this year to pay for the teachers, doctors, social welfare etc.
Ask the people on social welfare how invisible the money is or how they would get on if it was decided not to borrow and not pay out social welfare
So how much are the Greeks & Spanish paying for their T-Bills?
Spain 0.08%, Greece around 4%.
http://ycharts.com/indicators/spain_13_month_treasury_bill_yield
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_16/04/2013_494035
Shane Ross debunks the spin around Treasury Bill sales.
http://www.independent.ie/opinion/columnists/shane-ross/shane-ross-bond-sale-never-fit-the-bill-26873418.html
Any chance of a few bob .
Does this not make a non sense of PPP projects?
If the state can borrow money at such a low rate does this not make non sense of PPP projects where companies have to borrow at a multiple of that rate?
have your say