Bond auction set to test mood of international investors
National Treasury Management Agency due to raise new borrowings via bond auction
Treasury Building, Dublin: there is speculation the NTMA could seek to raise longer-term funding. Photograph: Cyril Byrne/The Irish Times
Next Thursday will provide an interesting test of the mood of international investors towards Ireland. The National Treasury Management Agency (NTMA) is due to raise new borrowings via a bond auction. We do not know the amount it will seek to raise or over how long. However, an auction would normally raise at least €1 billion – and sometimes significantly more. There is speculation the NTMA could seek to raise longer-term funding this time, perhaps for 30 years.
So far there has been little reaction in bond markets to the ongoing political uncertainty, or, for that matter, the threat of Brexit to the economy. This is due partly to the extraordinary period of low interest rates and the ECB’s bond-buying programme.
Even allowing for this, Ireland has done well, avoiding the nerves that has affected some other markets, notably Portugal. The question is whether we can maintain our relatively high rating. The overall cost of servicing our debt is slowly coming down as we raise more issues at a low cost. For a state with high debt it is a hugely valuable trend.