Monday 29 May 2017

State to borrow despite volatility

The NTMA issued €1bn of 10-year bond debt last week. Photo: Reuters
The NTMA issued €1bn of 10-year bond debt last week. Photo: Reuters
Donal O'Donovan

Donal O'Donovan

The State will borrow €500m of short term debt repayable in one year on Thursday but the deal is now unlikely to test the lower limits of historic borrowing costs.

The National Treasury Management Agency (NTMA) issued €1bn of 10-year bond debt last week at a rate that works at just 0.33pc interest per year - an all-time low. On Thursday, the NTMA will offer investors €500m of so-called Treasury Bills with a 12-month maturity.

Global markets have sold off in recent days, pushing bond yields higher on speculation that big, developed, central banks have reached the limits of their support for financial markets.

US equities shifted back from all-time highs on fears monetary stimulus in the form of super low borrowing costs for banks and mass buying of bonds may have peaked.

It's pushed the yield on the Irish bonds issued last week wider to 0.5pc - the likely price the State would have paid to borrow yesterday.

However, in relative terms Ireland has held out better than France and Germany during the sell-off.

Irish Independent

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