THE NATIONAL TREASURY Management Agency has announced that it is to auction off another €500 million worth of short-term treasury bills this Thursday.
The T-Bills have a three-month maturity similar to those which sold in July at an annualised interest rate of 0.2 per cent.
The issuance is part of the NTMA’s continued re-engagement with the markets but the regularity of the short-term loans means that they have offered little fresh information of late about Ireland’s standing.
“I don’t think more recent auctions have told us a whole lot new about Ireland,” said Investec’s chief economist Philip O’ Sullivan. “We would’ve seen a significant fall in terms of borrowing costs when we initially came back into the markets and more recent auctions have gotten away at very low rates indeed.”
Ireland began re-selling treasury bills in July 2012 at which time the yield was 1.8 per cent, with the interest on the last two auctions being at the far lower rate of 0.2 per cent.
Ireland’s ability to raise it’s own funding will be tested to a greater extent if it were to raise money with a loan of much longer maturity. O’Sullivan says that the NTMA currently has a healthy level of liquidity and does not need to raise funds but would ideally like to make a modest 10-year bond sale of about €1 billion to demonstrate market strength:
The market is anticipating that there will be further long term issuance out of Ireland, possibly before the year end. This tallies with guidance from Michael Noonan and the NTMA. However, given the ample liquidity the State has to hand – it is currently fully funded into 2015 – pricing is likely to take priority over size in any new issuance, with the objective being to consolidate the progress Ireland has made in terms of re-engagement with the markets.