Friday 15 December 2017

NTMA Bill sale could help Moody's on upgrade

John Corrigan, CEO of the National Treasury Managment Agency
John Corrigan, CEO of the National Treasury Managment Agency
Sarah McCabe

Sarah McCabe

THE National Treasury Management Agency (NTMA) has announced another €500m auction of Treasury Bills as it pushes for a ratings upgrade from Moody's later this week.

The auction will take place this Thursday and have a three-month maturity. The NTMA has already raised more than 80pc of its funding target of €8bn this year. The last sale, €750m worth of 10-year bonds sold earlier this month, was almost three times oversubscribed.

The news came as Irish bond yields dipped back towards record lows, adding to growing confidence that Moody's will lift Ireland's credit rating from its current Baa 3 status, the lowest investment-grade rung.

Based on borrowing costs, the prospects look good; Irish yields dropped below UK yields for the first time in six years last week. Analysts said Ireland's long-term borrowing costs are now on course to fall below that of the US. Irish 10-year yields opened yesterday 2 basis points lower at 2.66pc; equivalent UK and US bonds were quoted at 2.71pc and 2.63pc, respectively.

The Moody's update is due for release on Friday. Analysts at RBS are predicting a one-notch upgrade. Moody's last update on Ireland, in March, prompted a major fall in the cost of Irish borrowing. The decision, which upgraded Ireland's government debt from "junk" to higher quality "investment grade" Baa3 status, was seen as a major plaudit for the government and the NTMA, which had lobbied hard for the change.

Irish Independent

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