In its first bond sales event since March, Ireland intends to auction approximately €1 billion worth of bonds this Thursday. This endeavour is overseen by the National Treasury Management Agency (NTMA), responsible for managing the Irish government’s finances. The NTMA announced on Tuesday that it plans to launch a 2.6% bond which will reach maturity in 2034, and another 0.55% bond set to mature in 2041.
The upcoming auction will strictly involve primary dealers, as is standard procedure, according to the NTMA. This endeavour draws parallels with a similar bond sale held in March and takes place amid anticipation that the European Central Bank (ECB) will implement its first interest rate cut in almost two years next month. No other bond sales are anticipated before the month of June draws to a close.
Financial experts will be keenly observing both the yield or interest rate the NTMA will need to pay on these bonds and the degree of over-subscription at the auction. Up to this point in the year, approximately €4 billion worth of bonds has been sold by the agency. Their objective is to sell an amount of debt ranging between €6 billion and €10 billion over the course of 2024.
There are expectations for the ECB to kickstart interest rate reductions from June, but the rate of these reductions is less predictable than previously projected. This uncertainty is due to a surge in the growth of prices in the US, which has triggered worries among market participants that inflation might be more deeply rooted in the global economy than initially apprehended. Generally, central banks aim for an annual inflation rate of around 2 per cent.