Ireland has made “significant progress towards achieving sustainable market re-entry,” the chief executive of the National Treasury Management Agency (NTMA) said today.
On Tuesday, the NTMA announced an auction of Treasury Bills (Bills) on Thursday 13 September 2012. The NTMA will offer €500m of Treasury Bills with a three-month maturity similar to the last Treasury Bills auction in July.
It should not be forgotten that this “significant progress” is in respect of funding budget deficits.
Speaking at an event in Dublin hosted by the Leinster Society of Chartered Accountants, NTMA chief executive John Corrigan said Ireland continues to face challenges but that international investors are encouraged by positive signs emerging from the Irish economy.
Corrigan said the NTMA’s successful bond funding this year was achieved because investors are comfortable with the Government’s adherence to its Troika commitments and with the support expressed by EU leaders for improving the sustainability of Ireland’s adjustment programme.
“The NTMA’s objective is to achieve sustainable bond market re-entry over the coming months and through 2013,” said Corrigan.
“We have taken a number of successful steps to achieve this re-entry on a phased basis, including a long-term bond switch in January, the sale of Treasury Bills and long-term bonds in July and the first-ever sale of Irish Amortising Bonds in August. We also plan to issue inflation-linked bonds.
The average interest rate of just under 6% on the recent sales of long-term bonds and amortising bonds is higher than we would expect to pay on an ongoing basis as we return to the market; but our primary objective was to tackle the “funding cliff” presented by some €12bn of bonds maturing in January 2014. Reducing that to €2.4bn has removed a major obstacle to full market re-entry and should, in tandem with continued progress on other fronts, help us achieve lower yields.”
Corrigan said that wider Eurozone uncertainties remain a risk to achieving market re-entry but there had been a number of recent positive developments. These include the agreement in principle by EU leaders to bank recapitalisation directly by the ESM (rescue fund) and the ECB’s announcement of an open-ended commitment to buy sovereign bonds in the secondary market subject to conditionality, but without claiming seniority over other bondholders, he added.