The National Treasury Management Agency has today said it will resume borrowing on the state’s behalf from international money markets as soon as conditions allow, saying Ireland may not necessarily have to draw down the bailout funds provided.
NTMA chief executive John Corrigan this morning said the agency was still monitoring market conditions, and that it would move to issue new Irish bonds – which the current bailout funds are being provided in substitute for – whenever conditions were better than the fixed rates offered by the EU and IMF.
The terms of the agreement reached with those two bodies, Corrigan said, did not “preclude the NTMA from seeking to fund in the markets itself”, the Wall Street Journal quotes.
“It was important from a debt management perspective to avoid a situation whereby Ireland would be faced with a “funding wall” upon the conclusion of the programme,” Corrigan said in the NTMA’s end-of-year statement.
The €67.5bn worth of 7.5-year loans being provided by Brussels and Washington are being offered at an average rate of 5.83%; at present, second-hand Irish bonds maturing in eight years’ time are trading at 8.625% this afternoon.
Ireland was forced to negotiate funding deals with the EU and IMF after the market costs for Irish borrowing spiralled beyond levels considered sustainable by the Irish state in September; the NTMA cancelled scheduled auctions for October and November, citing that the high interest rates were beyond what Ireland was willing to pay.
This afternoon, the interest rate being demanded by the markets for Irish 10-year loans – considered the benchmark measure among investors of a country’s ability to meet its obligations – continued to rise above 9%, a level around which it has hovered since before Christmas.
Elsewhere in the NTMA’s end-of-year report, the agency said the cost of paying interest to service Ireland’s national debt – which stood at €93.4bn at the start of the year – had risen to €4.8bn last year, the equivalent of over 15% of Ireland’s tax take for the year when compared to exchequer returns released on Wednesday.
That bill for serving Ireland’s borrowings was, however, €320m below the amount budgeted for.
Fine Gael finance spokesman Michael Noonan described the €4.8bn interest bill as the “toxic legacy of 13 years of Fianna Fáil government”.
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