State sells €1bn of bonds ahead of ECB meeting

The State's debt agency sold €1 billion of bonds on Thursday morning, reaching 96 per cent of its minimum full-year fundraising target, hours ahead of a key European Central Bank (ECB) monetary policy meeting.

The National Treasury Management Agency’s latest debt-raising was by way of one of its regulator auctions, this time issuing benchmark 10-year bonds, the Government’s most actively-traded notes in financial markets.

The bonds were priced to yield 0.888 per cent and bids of some €2.395 billion were received for the notes.

All told, the National Treasury Management Agency (NTMA) has now raised €13.5 billion through the sale of benchmark bonds this year out of a full-year targeted range of between €14 billion and €18 billion.

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The ECB left benchmark interest rates unchanged later on Thursday and confirmed that it will halve its bond purchases to €15 million per month from October as it continues to wind down its massive quantitative-easing (QE) stimulus programme.

Removing stimulus

With euro zone inflation rebounding and growth levelling off at a relatively healthy pace, the ECB has been gently removing stimulus for months in the belief that a range of risks from global protectionism to Brexit were not enough to derail a growth run that is now into its sixth year.

The ECB has bought more than €2.5 trillion of debt in the past four years, depressing borrowing costs and driving up economic growth following a double-dip recession that nearly tore the 19-member currency bloc apart.

"The ECB continues to exert control over financial conditions with its slow, transparent and balanced exit from QE," said Mark Wall, an economist with Deutsche Bank, adding that the market will have to wait "a little longer" for the ECB to confirm that net bond purchases will cease in December.