State plans to 'test' debt markets

The Government's debt management agency plans to try to begin borrowing from private investors in the middle of this year.

The head of the National Treasury Management Agency, John Corrigan, said today the objective would be to raise “billions rather than millions”.

The NTMA, which ceased issuing Government bonds in late 2010, intends to test the market by issuing short-term debt instruments, known as treasury bills. These typically mature within one year.

If sales of treasury bills are successful, the agency intends to auction off longer-dated government bonds as it weans itself off EU-International Monetary Fund lending.

Mr Corrigan said there are very considerable uncertainties as a result of the euro area debt crisis. Efforts to borrow fresh private money would therefore have to be “opportunistic”.

He also said discussions with the parties to Ireland’s bailout on restructuring more than €30 billion in promissory notes used to rescue failed Irish banks were “on-going”.

It is a central objective of the Government to lessen the burden of these bank bailout costs, not least so that total public debt be made more manageable. That, in turn, would make borrowing easier and cheaper for the government.

Mr Corrigan was speaking during a briefing on the NTMA’s activities in 2012, along with those of the many agencies within its remit, including the National Asset Management Agency and the National Pension Reserve Fund.

He said his organisation had met more than 300 institutional investors across the world in 2011, and that further meetings in Europe, North America and Asia were planned in 2012.

“In our dealings with investors we have noted that Ireland is gaining credit for the progress it is making,” he said.