Sunday 21 January 2018

Cyprus crisis unlikely to hit NTMA plan to borrow €500m tomorrow

Donal O'Donovan

Donal O'Donovan

The Government plans to borrow €500m in new three-month debt from the markets at an auction tomorrow, the National Treasury Management Agency said.

The auction will be the a test of the market for Ireland following the collapse of the controversial bailout deal for Cyprus, which has reignited fears that the euro crisis could reignite.

Irish government bonds weakened in trading yesterday after the Cypriot parliament became the first anywhere in the eurozone to vote against a bailout deal.

That was over plans to hit savers in order to lower the cost of rescuing their banks.

Euro area

Bonds across much of the euro area were weaker as a result.

Even so, the Irish plan to issue low-risk, short-term IOUs, known as "bills" is unlikely to be seriously affected even if the crisis on the Mediterranean island worsens.

The NTMA has been issuing the bills since last July, when it went to the markets for the first time since the bailout.

There are now around €1.5bn of bills in circulation at any one time, because new bills are issued as old ones get repaid to investors.

In the most recent deal, the Government raised €500m of the three-month treasury bills at an interest rate of just 0.24pc on February 21.

While the NTMA is not expected to have a problem raising cash tomorrow, traders and policy makers will watch to see whether the cost of borrowing is affected by the latest euro fears.

Irish Independent

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