Tuesday 24 April 2018

NTMA ups activity to raise cash in short term markets

€500m in commercial paper is the largest single tranche issued since the bailout

Emmet Oliver, Deputy Business Editor

Ireland is gradually building up the amount of money it raises from the short-term money markets in an attempt to stay on the radar of the wider bond market.

It is understood Ireland, in recent days, has raised up to €500m in commercial paper, the largest single tranche issued since the country went to the IMF/EU for an international bailout last November.

While 9pc yields on 10-year money mean there is no way for Ireland to re-enter the main European bond market, the NTMA has been ramping up its short-term activity, although the purchasers of the debt have not been disclosed.

Commercial paper, which lasts only 270 days at most, is raised by companies and governments to address short-term funding needs and for cash purposes. It does not replace longer-term funding.

It is understood the Irish debt was for one month. The interest rate was not disclosed.

The NTMA declined to comment on its strategy in the short-term money markets, but said it was active in commercial paper at present.

"From the NTMA's point of view, while the sums involved and the duration of the debt are small in relative terms, they provide a useful function in maintaining a low-key market presence,'' said a statement.

"While we won't comment on transactions case by case, we are happy to acknowledge that they are continuing and that there is an ongoing interest in this programme,'' it added.

The Government and the NTMA are hoping that a return to the bond market can occur some time during the course of the current IMF/EU programme, but most analysts still believe this is a long shot, particularly with the eurozone debt crisis lingering on.

Nervous

The private-sector participation forced upon banks who hold Greek bonds has made many investors nervous about lending to peripheral Europe on anything longer than a few months.

In order to raise large amounts of funding, the Government needs to issue on a five-year and 10-year basis. Adding to the challenges is that Ireland will have to redeem a large bond -- €11.8bn -- in 2014.

However, much of the focus of bond buyers will only turn back to Ireland in December when the Budget will be announced.

Expenditure reductions of between €3.6bn and €4bn are expected, with the final figure based on tax returns.

Irish Independent

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