Ireland to return to debt markets

The National Treasury Management Agency is to sell Treasury bills later this week for the first time in almost two years.

The agency this morning said it was planning to offer €500 million of Treasury bills with a three-month maturity at an auction on Thursday morning.

Irish Treasury bills were last auctioned in September 2010, a short time before the State had to seek an EU-IMF bailout as borrowing costs had risen to unsustainable levels.

?The resumption of Treasury bill auctions follows an intensive engagement with investors both domestically and overseas during the past 18 months and marks an important first step in our phased re-entry to the capital markets,? NTMA chief executive John Corrigan said.

In the Dail this afternoon, Taoiseach Enda Kenny said the move was an indication of the country ?dipping its toe in the water?.

The auction will be conducted on the Bloomberg Auction System and will be confined to recognised primary dealers and eligible counterparties, the NTMA added.

A non-competitive auction will immediately follow the competitive auction and will close on Friday at 4pm. The bills will be listed on the Irish Stock Exchange and primary dealers are subject to the normal reporting obligations to the exchange.

The bills may be priced at a rate of less than 2 per cent, said Andy McEntee, head of money markets at Davy, a primary dealer in Government debt.

The bonds which the Government pays 5 per cent interest on and fall due in October 2020 rose for the fifth straight day, with the yield falling 11 basis points to 6.23 per cent at 1.31pm, the lowest since October 2010.

The rate was at 7.11 per cent on June 28th, and exceeded 14 per cent about a year ago.

Credit-Default Swaps Credit-default swaps on Ireland have tumbled near to the level when the Government last came to the market.

Five-year contracts fell 24 basis points today to 503, the lowest since November 2010 and near to the 460 basis point level on September 23rd, 2010, when Ireland last sold bills.

Financial markets responded favourably to news last week that the EU was willing to allow member states to separate banking aand sovereign debts, with Irish borrowing costs for 10 years dropping to their lowest level since the month before the November 2010 EU-IMF bailout.

Additional reporting: Bloomberg