THE MINISTER for Finance has said he does not expect the Government to avail of the European Central Bank’s new bond-buying programme before the end of the EU-ECB-IMF bailout, and only after that in an emergency.
Michael Noonan said that the State’s return to the borrowing markets was progressing well and that the ECB’s help would not be required if a deal was reached with the EU authorities on a deal to reduce the burden of the bank debt.
“Our assumption is that Ireland could access it the same as anyone else if needed, but we’re not planning to access it,” he said.
“We think we are doing very well and if we got a deal on the debt we’d be back in the markets anyway without that assistance.”
The Minister was speaking to the Reuters news agency at the Fine Gael parliamentary party meeting in Westport as the National Treasury Management Agency (NTMA) announced plans for a second auction of treasury bonds since the State sought a bailout.
It will seek to raise €500 million on debt maturing in December in an auction tomorrow in a further step for the State towards full access to the markets.
The State last raised €500 million on three-month bills in July at a rate of 1.8 per cent in a sale that was 2.8 times oversubscribed.
The NTMA said then that up to four more bill auctions may be held before the end of the year.
“Despite being what people saw as a very small positive, the auction of treasury bills in July significantly repriced short-term government debt maturing in the second quarter of next year,” said Cathal O’Leary, head of fixed income at NCB Stockbrokers in Dublin.
Two-year Irish government bonds have fallen to 2.2 per cent from 4.8 per cent last July. The decision of euro zone leaders to seek to ease the bank bailout costs on the State at a summit in June has driven bond yields lower.
Mr Noonan said yesterday that the Government had not decided whether to seek to refinance the €28 billion of State promissory notes used to pay for the cost of Anglo Irish Bank and Irish Nationwide with long-term government bonds or euro bailout funds.
The IMF said on Monday that it saw a greater advantage to long-term sovereign bonds being used as it would avoid adding to debt the markets would consider as ranking higher than existing debt.
