Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
THE NATIONAL TREASURY Management Agency has announced that it is to auction off another €500 million worth of short-term treasury bills this Thursday.
The T-Bills have a three-month maturity similar to those which sold in July at an annualised interest rate of 0.2 per cent.
The issuance is part of the NTMA’s continued re-engagement with the markets but the regularity of the short-term loans means that they have offered little fresh information of late about Ireland’s standing.
“I don’t think more recent auctions have told us a whole lot new about Ireland,” said Investec’s chief economist Philip O’ Sullivan. “We would’ve seen a significant fall in terms of borrowing costs when we initially came back into the markets and more recent auctions have gotten away at very low rates indeed.”
Ireland began re-selling treasury bills in July 2012 at which time the yield was 1.8 per cent, with the interest on the last two auctions being at the far lower rate of 0.2 per cent.
Ireland’s ability to raise it’s own funding will be tested to a greater extent if it were to raise money with a loan of much longer maturity. O’Sullivan says that the NTMA currently has a healthy level of liquidity and does not need to raise funds but would ideally like to make a modest 10-year bond sale of about €1 billion to demonstrate market strength:
The market is anticipating that there will be further long term issuance out of Ireland, possibly before the year end. This tallies with guidance from Michael Noonan and the NTMA. However, given the ample liquidity the State has to hand – it is currently fully funded into 2015 – pricing is likely to take priority over size in any new issuance, with the objective being to consolidate the progress Ireland has made in terms of re-engagement with the markets.
To embed this post, copy the code below on your site
“Sold with little fuss”…that’s what we need. Iceland 10 year bonds trading at 220 points above ours. Without fuss is how sovereign solvent companies trade.
What is a T-Bill? I honestly don’t know if these T-Bills are consolidated loans/debt or not.
It wasn’t explained very well, in my opinion.
While they’re at it, NTMA might sell my Gas and ESB Bills too.
Wait, if they’re worth €500m, then they must be like bonds or something.
They are consolidated debt packages that guarantee a return at the point of maturity so the 2% interest is paid at the end of the three months with the initial value of the t-bill, just means they don’t pay returns on a monthly period like other securities
They are short term loans (less than a year) that don’t pay any interest, rather they are issued at a discount and then redeemed at par value (why it is a yield of 2%, not interest rate of 2%). Treasury notes and bonds are longer term so they tend to pay interest on a bi-annual or annual basis, hope this helps :)
Thanks for that.
The rate is .2 %t not 2%. Even the .02% is annualized so the return would really only a quarter of that.
T bills are a no brainer for an investor with loads of dosh. The turn over is 3 months with guaranteed return. They also cost the state a lot more than bonds of 5 and 10 years, which is what we should be selling instead of these pathetic T bills. Its a pointless effort.
I agree, why are we shelling out 250k in interest plus administration costs to borrow money that we don’t need for three months.
We’ll never get out of this bailout the government keep selling T bills. have they not learned anything. ?? muppets
Ok, let’s stop paying social welfare, why the f$ck do you think the government borrows money?
To pay billions of private banking debt….that bloody why!
haha,,. conor. THATS NOT HOW IT WORKS.. you seem not be able to get your head round a lot of things the last couple of days.
T bills have to be paid back in 3 months, and cost a lot more than ordinary bonds. Most countries borrow money to pay the bills until the tax receipts come in, but this is akin to borrowing money from a loan shark.. Can you see the sense in that. go educate yourself instead of trying to hurl insults at people all the time.
Actually t-bills do not exclusively have to be paid back within 3 months, they are in fact short term bonds with maturities of less than one year.
The reason the Irish government is using these short-term bonds is to test the market. If they issue say a load of ten year bonds at an interest rate of ca. 6%, they are then locked into paying a 6% coupon rate for ten years. However if they issue short term bonds until the market gains confidence, they can issue long term bonds in the future at a much lower coupon rate in the future at a much lower overall cost than issuing high coupon long term bonds now.
How else do you think the country should borrow?
haha,,. simon. THATS HOW IT WORKS… LOL’09
More of our future and nation sold off.
The reality is that democratically elected politicians are completely incapable of managing any countries finances.
The reality is that politicians feel, and are probably right, that they must spend borrowed money for election success when this is actually giving away our nation and loading us with future debt burdens and taxes.
How many people go on Joe Duffy to demand reduced spending?
I saw an “Unemployed Action Group” with a placard saying “Not Our Debt”. Guess they didn’t get the irony.
The problem is simple.
The people required to run our country effectively have no interest in becoming politicians. So basically it is left up to complete morons to try and take a stab at it. Ireland will be pissing against the wind for the foreseeable future with the current generation of Politicians. There is just no one there at the moment with a proper business head on.
have your say