Friday 24 November 2017

Michael Noonan hails €500m bond sale as ‘milestone’ in Ireland’s recovery

Minister for Finance, Michael Noonan and John Corrigan, Chief Executive, NTMA
Minister for Finance, Michael Noonan and John Corrigan, Chief Executive, NTMA

Lyndsey Telford

THE successful sale of €500m in bonds for the first time in almost two years is a milestone in Ireland's path to recovery, it was claimed.

Finance Minister Michael Noonan said Ireland secured a better interest rate than expected on the auction of the short-term Government debt.

Demand was high as the National Treasury Management Agency (NTMA) made a return to the international debt markets, with bids almost three times the amount of bills issued.

Mr Noonan said the auction of the bonds, which will mature after three months, was competitive and a good result.

"This morning's successful auction of three months Treasury bills by the NTMA was a very important milestone on Ireland's continuing path to recovery," he said.

The agency sold off its target amount of Treasury bills, securing a 1.8pc yield - interest rate on the debt - a better deal than its estimated 2pc.

"This was first time that the NTMA has raised money in the markets since September 2010 and highlights the significant progress that the Government has made in restoring Ireland's reputation," said Mr Noonan.

The minister maintained the auction was an important first step in Ireland's overall plan to make a full return to the capital markets next year and to work towards reducing its deficit.

"The markets have reacted positively to our strong programme implementation to date, to the decisive yes vote in the recent referendum on the stability treaty and the decision taken at last week's summit to break the negative links between the sovereign and the banks," he added.

The auction closed at 10.30 this morning with total bids received amounting to €1.415bn, - 2.8 times the amount on offer.

The result, which will be seen as increased market sentiment towards the country, will be used to gauge Ireland's readiness to re-enter the sovereign debt market for trading.

But NTMA chief executive John Corrigan warned while the sale was encouraging, it is only the first step towards Ireland's ultimate goal.

"We are encouraged by the strong demand, the competitive interest rate and the presence of significant international interest in today's auction," said Mr Corrigan.

"However, we are conscious that this is only the first step towards our ultimate goal of full access to the capital markets."

As the sale was confirmed in the Dail by Education Minister Ruairi Quinn, opposition TDs had a mixed reaction.

"The house may be interested to know that the NTMA sold bonds this morning at a 1.8pc yield. That's less than the estimated 2pc," said Mr Quinn, who was taking Leaders' Questions.

Opposition deputies accused the minister of using the news to deflect from questions put to him.

"You can't even accept good news. God love you," he replied.

"You can't even accept good news. You're really pathetic," he added.

European Central Bank President Mario Draghi also welcomed the move.

“Ireland is a member country that through extraordinary efforts has run a program which is on track, so much that Ireland returned to the market today, much earlier than anybody could have expected until two or three months ago,” Mr Draghi said at a press conference in Frankfurt .

“This is very very important, actually it is so important that an event like this could be one of the various factors that are making the financial environment nowadays a little less tense than it was a month ago,” he said.

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