THE NATIONAL Treasury Management Agency (NTMA), the State’s money manager, will seek to raise a combined value of between €750 million and €1 billion in the sale of two long-term Government bonds on Tuesday.
The NTMA has said that it will seek to raise a bond maturing in 2011, paying a coupon of 4 per cent, and a bond maturing in 2020 with a 4.5 per cent coupon.
The bonds will represent the shortest and longest Irish Government securities on offer.
The Government has raised €10 billion of an estimated €25 billion it plans to borrow this year to meet the hole in the public finances which has deepened due to the deterioration in the economy.
The NTMA has already announced plans to raise up to €10 billion from short-term loan notes with a duration of up to 12 months under a new treasury bill programme starting next Thursday.
The yield to investors on the longer-term bonds, which represents the cost of the borrowing to the State, will be closely watched as a signal of how investors views Ireland’s financial stability and the State’s ability to pay its debts.
The difference in yield, or the spread, on the 10-year Irish Government and its German equivalent, the benchmark for investors, moved to its widest level in 10 years, reflecting the increased risk assigned to Irish sovereign debt.
The spread narrowed yesterday after EU leaders agreed to boost funding to the International Monetary Fund and said they would double the credit line to states in financial distress. Next week’s State bond sales will be the last before the emergency budget on April 7th when the Government will try to raise €4.5 billion.
