CM – NTMA taps bond market for up to 1.5 billion euros if yields rise



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The government plans to borrow EUR 1 to 1.5 billion on Thursday by issuing bonds with maturities in 2026, 2031 and 2035.

The National Treasury Management Agency (NTMA) announced the latest bond auction on Monday. The debt will be added to the 13.25 billion euros raised on the market so far with an expected total debt of 20 billion euros.

The money is intended to close the gap between income and expenditure of the state, which is at an increased level run to finance the costs of dealing with the Covid pandemic.

The latest figures from the Treasury indicate a total deficit of around 18 billion euros for the year.

The debt that this year should be borrowed are below the 24 billion euros that were borrowed last year, but will still push the national debt to an unprecedented high of almost 240 billion euros.

The cost of servicing the record debt remains thanks to historical lower borrowing costs on the bond market, which are supported by massive bond purchases by the European Central Bank (ECB), relatively low.

On the markets there is increasing We bet that the extent of the ECB’s intervention could be scaled back to curb an expected rise in inflation.

The yield or yield that investors are asking to hold Irish 10-year bonds has risen over the past few weeks but still at a very cheap 0.13 percent.

Yesterday a measure of inflation expectations in the Eurozone – the five-year, five-year inflation date – rose to 1.606 percent, the highest value since May 19.

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Eurozone government bond yields rose, but analysts expect the recent downtrend to resume after last week’s US payroll data failed to deter investors from the safety of fixed income.

A poll yesterday showed that eurozone business grew as fast as it had in 15 years in June as the relaxation of further coronavirus restrictions helped the bloc’s dominant service industry.

The yield on 10-year German Bunds rose 2.6 Basis points to minus 0.209 percent, while the French and Italian benchmark yields rose by 3 basis points for 10 years.

This increase in yields in the euro zone is due to the fact that the yield on the German 10-year Bund rose by 8 Basis points has fallen – its largest weekly decline since December 2020.

Analysts led this decline ng goes back to the caution about the economic impact of the delta variant of Covid and the expectations that the European Central Bank will be slow to withdraw support from the market, even if there are signs of a pick-up in inflation.

« Self in a more harmless delta scenario, we now expect further restrictions on international travel hitting the crucial tourism sector in southern Europe for a second summer, ”Morgan Stanley economists wrote in a customer note.




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