Ireland Close To Normalizing Global Funding

Ireland is very close to the normalised market funding that would make it eligible for the European Central Bank's bond-buying programme after the country's bond sale this week, its debt chief said on Wednesday.

Ireland kicked off its funding for the year on Tuesday when it sold 2.5 billion euros ($3.3 billion) of 2017 paper, raising a quarter of the 10 billion euros it aims to borrow in 2013 before a planned exit from its 85 billion euro ($111 billion) EU/IMF bailout.

The National Treasury Management Agency (NTMA) hopes to resume monthly auctions at some point this year and said this could be enough for it to qualify for the ECB's Outright Monetary Transactions (OMT) scheme. Under this plan, countries can benefit from unlimited ECB purchases of their bonds provided they first apply for aid from Europe's bailout fund.

"One of the conditions for OMT is that you have to have normalised your engagement with the markets. Yesterday's transaction is as close to normalisation, maybe the monthly auctions would be the icing on the cake," NTMA chief John Corrigan told a news conference.

"I would make the case (of normalisation) but I'm not sure that the ECB would accept that case, but it's very close to it."

Ireland and its bailout lenders are also examining what additional support measures could be put in place to smooth its exit from the November 2010 bailout, including gaining access to the European Central Bank's new bond-buying programme.

Corrigan said Dublin's lenders were also examining what sort of conditional credit lines they would be prepared to offer when Ireland's bailout ends, a backup he said that would give the market comfort and influence the timing of his agency's bond operations.

As well as the monthly bond auctions, Corrigan said his team would discuss a 10-year benchmark issue with investors and that the option of a U.S. syndicated issue was still on the table as American investors remained "very bullish" on Ireland.

The NTMA also announced that its first treasury bill auction of the year would take place on Jan. 17 and Corrigan, who described Moody's junk rating of Ireland as "depressingly low", said the T-bill sales would remain capped at 500 million euros.

Reuters

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Dean Popplewell

Dean Popplewell

Director of Currency Analysis and Research at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2007, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell