Ireland will proceed with a bond auction next week as "normality" has returned to markets and it is reasonably confident it can keep its 20 billion euro issuance plan for the year, the head of the national debt agency said.
The National Treasury Management Agency (NTMA) plans to sell bonds worth between 1 billion and 1.5 billion euros on Tuesday in an attempt to show it can continue the pace of its usually strongly bid monthly auctions even amid turmoil in euro zone markets. The NTMA had earlier said it might skip the auction due to market turmoil but then said it would offer two bonds maturing in 2014 and 2020 at the May 18 sale after all.
"We've seen normality restored to the markets and we're quite happy to go ahead," John Corrigan, NTMA chief executive said in a Reuters Insider Television and text interview. "Currently the market is trading in a reasonably ordinary way, we're happy with the way it's trading," Corrigan said.
Ireland, which faces no big debt repayment deadlines in 2010, has made fast progress towards this year's 20 billion euro borrowing target. Its syndicated sales and monthly auctions, which usually raise 1 billion to 1.5 billion euros each with good demand, have built up a comfortable buffer of funding.
European authorities announced a massive debt safety net for Greece, Spain and Portugal this week, but investors remain sceptical whether those countries can take the pain of overhauling their poor public finances. The Irish/German 10-year bond yield spread has come down to around 185 basis points, having fallen sharply on Monday from levels above 300 basis points following the rescue package. Higher-yielding debt has gained support in the last few days from central bank purchases as part of the emergency measures.
Markets in Ireland, which had proportionally the biggest budget deficit in the European Union last year, have received some support from a perception that the government is determined to fix Ireland's finances.