Friday 22 November 2019

ECB largest holder of Irish debt, edging out investor Hasenstab

Donal O'Donovan

Donal O'Donovan

The European Central Bank (ECB) has revealed for the first time that it holds €14.2bn of Irish government bonds, making it the biggest holder of Irish debt in the world.

The ECB now owns considerably more Irish debt than the €8.5bn of bonds controlled by US investor Michael Hasenstab's Franklin Templeton fund.

However, the bonds held by the ECB are valued at €13.6bn – less than the so-called 'face value' of the assets.

The ECB also revealed that it holds more than €200bn of IOUs issued by euro-area governments, including Ireland.

It bought the IOUs under a secretive purchasing scheme aimed at stabilising the markets by buying bonds at times when normal investors were afraid to invest.

It helped keep Italy and Spain out of bailouts, but not Ireland.


Now the ECB has revealed the breakdown of bonds it holds for the first time.

In face-value terms, it has €102.8bn of Italian bonds, €44.3bn of Spanish debt, €33.9bn of Greek and €22.8bn of Portuguese bonds, as well as the Irish debt.

The bond-buying is known as the Securities Markets Purchases scheme.

The scheme ended last September.

The ECB made a €1.1bn profit on the bonds last year, half of that on its Greek government bonds.

Meanwhile, Ireland's return to more normal borrowing continued yesterday when the Government borrowed €500m from private-sector investments at an auction of short-term "bills".

The state paid slightly more to borrow than at the previous auction in January.

There was a slight softening off in investor demand for the new Irish bonds.

The National Treasury Management Agency (NTMA), which handles debt deals for the Government, paid 0.24pc to borrow "bills" due to be repaid in three months' time at the debt auction.

That's up from an interest rate of 0.2pc in January.

Demand from investors was not as strong as in January.

Yesterday, 3.3 times more cash was offered than the NTMA required, down from 3.8 last month.

Irish Independent

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