Turmoil threatens agency plans for monthly bond auction
Related Articles
THE National Treasury Management Agency (NTMA) has said it may cancel its next planned monthly bond auction if the market turmoil sparked by the Greek crisis continues.
However, the agency is determined to go back into the market in June to restore confidence in Ireland's ability to borrow money.
"Tactically, there is a benefit to be seen out in the bond markets. It's not just as simple as going out and borrowing money. Skipping one month's fundraising is not an issue, but if we were to go on any longer it could prove problematic," a spokesperson for the NTMA said yesterday.
The NTMA normally issues bonds on the third Tuesday of every month, but the agency may not proceed with its planned May issue.
''The NTMA are monitoring the situation and will make a more practical decision closer to the date," the agency spokesperson said .
Not holding its customary bond auction of up to €1.5bn next month could be seen as a sign of fear, but an unsuccessful auction could be even more damaging.
Greece's crisis has caused its government bond yields to soar in recent weeks. Irish 10-year Government bond interest rates rose sharply last week, but eased back 3.3 basis points to 5.15pc late on Friday.
However, Ireland had already raised 60pc or €11.9bn of its planned borrowing needs for this year. Existing cash reserves could see it cover all of the estimated €20bn required
"We remain in a very strong position for our fundraising and this gives us the flexibility to opt out of the next auction if needs be," the NTMA spokesman said.
The next auction is scheduled for May 18.
The financial markets are bracing themselves for another turbulent week as they deal with the fallout of Greek's €110bn rescue package agreed in Brussels.
Ireland has committed €1.3bn over three years to the plan.
Luxembourg's Jean-Claude Juncker said he was not worried about the Greek crisis spreading to other euro states.
- Maeve Dineen Business Editor
Irish Independent
