NTMA to sell up to €1.25bn of bonds this week

The National Treasury Management Agency (NTMA) plans to sell €1.25 billion of bonds on Thursday.

This means the State’s debt agency will have raised almost 75 per cent of the minimum of €9 billion of debt it plans to tap the markets for the entire year by the end of this week. The agency has already raised €5.25 billion of its full-year objective, between €9 billion and €13 billion.

The NTMA plans to sell between €1 billion and €1.25 billion of bonds on Thursday through a dual auction of debt that matures in 2026 and 2045. The agency returned to dual auctions last month for the first time since 2010.

The auction will take place on the same day as the European Central Bank’s governing council meets in Frankfurt. The ECB’s €2.3 trillion bond-buying programme, launched in 2015, and its record-low interest rates, with the main rate currently at zero, has helped suppress euro-zone bond yields in recent years. The yield on Ireland’s 10-year bonds is currently just over 1 per cent, compared with over 14 per cent at the height of the crisis.

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Inflation forecasts

While economists are largely agreed that the ECB will not change monetary policy this week, it is expected that the bank’s staff will raise their euro-zone inflation forecasts after consumer prices hit 2 per cent in February – for the first time in four years – to breach the ECB’s target of just under that level.

"Energy will be the main driver of these revisions though," Morgan Stanley economists including Jacob Nell said in a note on Monday. "That's why we think the ECB will want more evidence of underlying inflation pressures before concluding that inflation is normalising. In terms of growth, we don't expect any significant amendments. The ECB is likely to acknowledge near-term improvement, but highlight still high uncertainty."

Alan McQuaid, an economist with Merrion Capital, said the ECB will likely wait until after the German election in September before committing to any monetary policy changes. In the meantime, the Netherlands holds a general election on March 15th, while France’s next president will be decided in two votes, in April and May.