NTMA sells €500m of T-Bills ahead of expected upgrade from Moody's

Thursday 15 May 2014 11.39
Moody's expected to raise Ireland's ranking to Baa2 from Baa3
Moody's expected to raise Ireland's ranking to Baa2 from Baa3

The National Treasury Management Agency has successfully sold €500m of three month Treasury Bills this morning.

The agency said it sold the bills at an annualised yield of 0.22% and the auction was 3.5 times oversubscribed.

Meanwhile, the country's rating will probably be raised for the second time in less than six months by Moody's
Investors Service as the economy stabilises and concerns that the euro zone may be under threat ease.

Moody's is set to raise Ireland's ranking to Baa2 from Baa3 tomorrow, when the ratings company is scheduled to deliver its latest verdict on the country.

This is according to six of nine analysts and economists surveyed by Bloomberg News.  Three predict no change, the survey shows.

Moody's is upgrading its view as Irish employment grows, the Government deficit narrows and the wider crisis which threatened the euro-zone's future passes. 

The ratings company restored Ireland's investment-grade rating in January and last week raised Portugal's rating.

"We'll go for an upgrade in rating this week given the generally bullish view Moody's seem to have right now on the euro zone," said Owen Callan, a Danske Bank analyst in Dublin. He was one of two analysts among 11 surveyed in January to predict an Irish upgrade.
 
To an extent, investors, who often ignore rating changes, have already upgraded their view of Ireland, reflecting European Central Bank President Mario Draghi's 2012 pledge to do 'whatever it takes' to defend the euro.

Last week, the country's borrowing costs fell below the UK's for the first time in more than five years. 

The yield on Ireland's 10-year benchmark government bond has fallen 87 basis points over the last 12 months to 2.64%. 

The spread, or difference, between German bonds of a similar maturity has also fallen 87 basis points to 1.26%.