Irish T-bills auction yields fall, shrugs off S&P

By Andras Gergely

DUBLIN, Aug 26 (BestGrowthStock) – Ireland on Thursday sold 600
million euros of treasury bills, at the top of its target range
and at lower cost than two weeks ago, seemingly shrugging off a
credit downgrade by Standard & Poor’s.

The debt agency’s 400 million to 600 million target range
was half of the usual auction amount, showing Dublin could
afford to be selective in its fundraising in turbulent markets,
having already funded virtually all of its 2010 requirements.

The average yield on bills maturing in February 2011 fell to
1.978 percent from 2.458 percent two weeks ago and attracted a
stellar bid-to-cover ratio of 10.1 on a sale of just 200 million
euros versus 500 million the previous time.

Paper maturing in April 2011 had an average yield of 2.348,
down from 2.81 percent previously, with a sale amount of 400
million euros compared with 500 million on Aug. 12, the National
Treasury Management Agency (NTMA) said.
“The fact that it’s 50 percent of the size of the August 12
auction certainly helps but in light of the S&P downgrade, I
think it’s a very good result,” said Fergal O’Leary at
Dublin-based Glas Securities.
After winning plaudits for moving quickly to tackle its
deficit, Ireland is once again at the centre of European debt
fears, struggling to draw a line under mounting bank rescue
costs which S&P cited when cutting its rating late on Tuesday to
AA-. [ID:nLDE67O0YY]

Markets want Ireland to put a final price on purging its
banks of a decade-long property binge but the NTMA said that was
impossible before the year-end when the state-run ‘bad bank’
will have largely completed its purchase of their commercial
property loans.

The NTMA said on Tuesday it disagreed with the basis for
S&P’s downgrade and a junior minister in Ireland’s finance
ministry on Thursday seconded the NTMA’s criticism of S&P’s
method in accounting for its bank rescue costs.

He said Dublin could reach an agreement with Brussels within
weeks on the fate of nationalised Anglo Irish Bank, which is
responsible for the bulk of recapitalisation costs.

Earlier on Thursday, Canadian Finance Minister Jim Flaherty
came to Ireland’s defence, saying it had a solid bank plan and
was Europe’s leader in fiscal reform, advising against rating
agency views such as S&P’s downgrade too seriously.

(Additional reporting by Padraic Halpin; Editing by John

Irish T-bills auction yields fall, shrugs off S&P