Monday 20 November 2017

State to raise €500m in 'bills' auction

Donal O'Donovan

Donal O'Donovan

THE Government is planning to borrow €500m on the markets in the fourth and final deal of its kind this year.

The National Treasury Management Agency (NTMA) said it plans to borrow €500m in three -month debt known as "treasury bills."

The cash will be raised from investors through an auction tomorrow.

The transaction marks a continuation, and normalisation, of Ireland's return to borrowing on the markets.

Investors who backed an earlier issuance of €500m of government "bills" in July were able to secure a yield, or interest rate of 1.8pc.

They got a premium over similar deals for other euro countries because it was the first Irish bill auction since before the 2010 bailout.

It was followed by the more ambitious deal later the same month when the NTMA successfully raised €5.2bn in much longer term bonds. The interest rate fell to 0.7pc at a follow-up auction of bills in September, and remained at the same level when a third €500m tranche of borrowing was raised last month.


Last night the yield on three- month Irish bills was unchanged at 0.7pc, indicating that investors will get around the same interest on the new debt deal.

"Bills" are regarded as an extremely low-risk investment, which is why the interest paid is below 1pc.

The yield on Ireland's most watched IOU, a bond due to be repaid in 2021, dropped to 4.7pc yesterday, back below the pre-bailout level.

It will mean a hat-trick of bond deals for Irish borrowers this week for the first time in more than three years.

It follows successful debt raising transactions for Bank of Ireland yesterday and the ESB on Monday.

Irish Independent

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