Successful Bill Auction

The remarkable thing about this morning’s 3 month t-bill auction is how unremarkable it was. The whole thing seems to have gone off without a hitch. Happy days. We’re not back in the bond markets just yet, but it is a good first step towards a return to business as usual.

By Stephen Kinsella

Senior Lecturer in Economics at the University of Limerick.

109 replies on “Successful Bill Auction”

Why does any institution buy a three month bill yielding <2% with cash?
Cash deposit pays more than 2.5% at present for big money?

If Greece has been going to this market all along in order to keep a toe in the water, why did we disappear out like a scalded cat.

It replaces mortgages and stuff on the Banks asset side of the balance sheet ,deposits are its liabilities.
Your tax goes to restoring the banks profitability as your deposits /the banks liabilties are subtracted to pay interest on the banks assets.
Its called deleveraging but without the production of new money.

Banks are collateral junkies – they in fact don’t print new money , they produce credit.
Even if their practises destroy society by robbing it of optimum quanity of medium of exchange that more accuretly reflect input output costs ,people continue to allow them to pump and dump entire societies.
Only Goverments can print new money.

Its a very sick system.
Its why we need manic “growth” even when it destroys general wealth through resourse depletion.
And now manic Austerity to bail out their growth malinvestments.

Reason they are going to the Market now is about optics and momentum. If they had stayed in the very short term government bond Market they would not have been able to get on the bloomberg ticker today and use that as a marketing springboard.


We have a fairly substantial cash buffer which means we don’t need short-term funding to offset fluctuations in revenue and expenditure or to fill gaps between loan drawdowns. I’m not sure if Greece have this buffer.

Per the NTMA there is almost €14.5 billion in the Exchequer Account.

@ Steve

Happy days indeed, congrats to the NTMA.

Have a party and give those hard-working NTMA folk performance bonuses!

The fact is that this has no relevance to whether Ireland can see the back of the Troka in 2013.

Who knows what the international situation will look like but what is more certain is that Irish growth will remain very weak into 2014.

Returning to the market and then have yields spike wouldn’t be very clever.

@michael h

Reading the coverage from afar, it just knocks commonsense on the head that so few are willing to call this act for the total farce it is.

Seeking short term money by a state fully funded for a period longer than than term is just a pitifully abject lesson in ‘cretinomics’.

For goodness sake, I thought Official ireland couldn’t lower the bar any further in self-delusion. But I was wrong.

@ The Alchemist

as mentioned in the other “Ooooh, is it a bill or a bond?” thread, the lack of imagination over why the NTMA would raise funds, what it means that they can raise short term funds, or what they do with them is quite depressing.

@ Jagdip

not at all off topic. Its all part of a process. Tbills one week, hopefully good data the next. Start adding these up, if they come as hoped, and you have a pretty good hand to play.

@Bond, EB

Well Draghi’s comments today on the economic outlook have taken the gloss off the recent rally and the spreads on Spanish and Italian bonds are moving in the wrong direction again.

Adding fuel to the mix was the tepid outcome to the Monti-Merkel summit. Germany still has little appetite to allow the ESM to directly fish for bonds in the secondary debt market.

None of this is good news for either a deal on Irish debt or an early return to the markets.

The League is not won in the first half-hour of rusty pre-season training – but it can be lost without pre-season training.

NTMA is simply doing its job.

@ Alchy

Ireland can only do so much on its own. If Spain or Greece or Italy blows up, there is nothing the NTMA can do to respond to that. All they can do is assume everything else stabilises, and try to plot their own course out of this. The t-bill sale is a small, but not irrelevant, part of that process.

@ Bond Eoin Bond

“the lack of imagination over why the NTMA would raise funds, what it means that they can raise short term funds, or what they do with them is quite depressing.”

What imaginative ideas are you suggesting the NTMA may have for this €500 million? I would have assumed it gets lumped in with the rest of the general exchequer funds.


‘No Measurable Effect’
ECB Interest Rate Cut Inspires Little Hope

The European Central Bank’s interest rate is now lower than ever before. But, even with the cut, few believe it will do much to energize the euro-zone’s flagging economy. The real problems are to be found elsewhere — and they aren’t getting better.

@ Seamus Coffee

Why am I not convinced?

“We have a fairly substantial cash buffer which means we don’t need short-term funding to offset fluctuations in revenue and expenditure or to fill gaps between loan drawdowns. I’m not sure if Greece have this buffer.”

The last time I heard this sort of talk, was back in July/August 2010 and it resulted in the NPRF having to be thrown on the table as part of the Troika MOU. I am in debt for 100,000 but have 5,000 in my current account and announce I’am flush for cash! We have services to handicapped children being cut left and right and you are telling me we have substantial cash buffers?

I am convinced that had there not been such loose talk, not to mention the constant real and imaginary dipping of the fund, that it would have been regarded as being “off limits”. German mentality is not to tap a fund that was established to help offset the cost of future pension liabilities and throw it into insolvent banks. However, they saw how incompetent we were and probably decided that if it was not demanded it would most likely be squandered on salary increases and the like. In that analysis they were correct. When this fund was being established Mr. Honohan warned that if it was not ring fenced it would disappear in the first economic crisis. In that he was correct, but how ironic it was that it’s his signature that appeared along side that of the late finance minister. Essentially liquidated the fun, what’s left 4bn? Some say it is “invested”. It will be very interesting to see the rate of return when the ESM starts taking equity stakes in our banks at market prices.

@ Carson,

The lack of imagination I would guess is people thinking that this has something to do with raising €500 million at whatever cost and wondering what will be done with it. This is not about raising €500 million. With nearly €14,500 million in the Exchequer Account we have no need for three-month money. This is about the act not the outcome.

If we borrow 100 Euro at this rate does this mean that we have to pay back 101.80 Euro in October
And if we have to roll over that does that mean that we have to pay 101.8*1.018 in January 2013
What is the annual rate of interest on these )assuming rolling over?
And how can we do this when our economy is not growing?

That would be €14,500 of Bailout money including an element of as yet unspent taxes. As a state we are not not capable of funding ourselves from current taxation which is why we are in a program and facing another one in 9 months time. This along with being saddled with a banking system that is desperately trying to meet its deleveraging commitments under the current MOU of 83bn. This against a background of some of the highest levels of personal debt in the EU. Constantin has alluded to this private corporate and sovereign debt time bomb which is over 600% of debt to GDP. That’s is why there is no wriggle room for government to raise taxes only possibility was to cut public sector salaries and welfare entitlements CP has ruled out one and the other will not be done as long as we have access to debt markets.

Surely there are very few people who are not painfully aware that today was merely a PR exercise?

More to the point of celebrating down at the NTMA is did we laid off any personnel down at the NTMA over the last two years when they could not sell a single bond or have they been sharpening their pencils? Presumably, they are now red in tooth and claw waiting to launch our long term bonds next year if the opportunity presents itself. Otherwise we will have to resort to bailout No. 2 from ESM with conditionality/ MOU. It’s sad that the whole economic thrust of this government is an obsession with borrowing and more borrowing. Happy are the days when we can fill our coffers with borrowed money and guarantee that our recession is dragged out for as long as possible without having to make structural changes. Mohamed el Erian has said that until we realise we are desperately need structural reforms we are going nowhere. Meanwhile we are breaking open champagne.

….are desperately in need of structural reforms we are going nowhere. Meanwhile we are breaking open the champagne

@ Eureka

1.80% is the annualised rate, ie 100 today returns 100 * 0.018 * (98/360)

(it’s 98 days in duration for some reason…)


It reminds me of a Bob Hope Vietnam tour with the canned laughter and applause to Hopes ancient Jokes
But without Raquel Welsh or Madeline Hartog Bell………… keep the spirits up amongest other things.

Yes I can hear our great leader now
“Come back next year when our country & people will have peace , freedom and Independence”

Begins 1H 22m

Even the French are at it with their new High speed lines.
It because they are lacking monetary sovereignty – goverments cannot spend without getting into debt to the banks , so they try to hide it amongest other programmes but this creates much bigger real costs.

The west is dead.
Long live the east.

@ Robert Browne

You are getting near to it there. NTMA is in danger of fading into insignificance, with consequent threat to its internal budget. The opportunity for a bit of positive PR was too good to miss. That’s about the height of it.

T-Bills 90 day 2% can be and are sold for less than face value. We do not have the whole picture.

In any case someone believes that our chances of going tits up within 90 days are near zero. I agree.

@ dork of cork

have been following this site for best part of twelve months now and can honestly say i have no idea what your talking about most of the time, everything you write seems to lead onto transportation figures and stats, don’t know if its just me but i know alot of people who follow this site, (who aren’t economists), to try to get an understanding of whats happening in this country. I don’t mean to personalise the matter, I’m sure your a smart guy/woman, just maybe simpler next time..
Rant over!!!!

Who bought the bills anyone?

Who cares?

The state just got €500 million for free into its pockets; it’s time to break out the bonuses and free PS jobs. Worrying about who gave the money or how much has to be paid back is, like, SoooOOO 2011. Let the good times roll man.

(Besides, it was BOI)

@robert b

A country with one of the highest levels of public and personal debt in the developed world, indeed.

Yet the same country or should I say its Establishment is gummed up with looking over the political shoulder reflexes that still four years on it cannot muster a detailed inquiry into the decision, the bank guarantee, that bankrupted the taxpayer/small business owner and sentenced a generation of ordinary youth of the country to emigration. It makes the search for the Higgs boson seem easy in comparison.

Ah yes, the Gentry. Pass the 500 million around it must be time to appoint some more special advisors.

Is it just a week since Enda was telling everyone that would listen “don’t tangle with me!”?

Today he’s accusing Ursula of “assault” having been, while surrounded by minders, cornered against a (potted?) plant.

A week is a long time in politics.

Ireland to seek more money on markets in near future

Head of the National Treasury Management Agency John Corrigan said Ireland would take a “very opportunistic approach” in a series of steps to borrowing money from private lenders.

Mr Corrigan was speaking after his agency raised €500 million at an interest rate of 1.8 per cent, a better rate than expected, yesterday.

Investors offered the NTMA almost three times more money than the €500 million it had targeted to raise by issuing treasury bills that are to be repaid in three months.

During a conference call yesterday afternoon, Mr Corrigan said his agency would work to rebuild trust among investors around the world in order to be in a position to borrow even more cash so that the State could wean itself off EU-IMF financing.

Mr Corrigan said that there was “strong evidence” that the “vast bulk” of the bills were bought by foreign institutions.

Speaking at his monthly press conference, ECB president Mario Draghi warmly welcomed Ireland’s return to the debt markets, describing it as “very, very important”.

“Actually, it’s so important, that an event like this could be one of the various factors that are making the financial environment now a little less tense than it was a month ago,” Mr Draghi said.

“Ireland is a member country that, through extraordinary efforts, has run a programme which is on track, so much that Ireland returned to the market much earlier than anybody could have expected until two or three months ago.

“I think this must be a success which should be properly celebrated and is testimony to the determination of the Irish Government and the capacity of the Irish people to understand all this programme that needed sacrifices.”

EU economics commissioner Olli Rehn said the transaction was an important step. “It reflects growing international confidence in Ireland’s strong track record of programme implementation,” Mr Rehn said.

@ DoD
“Head of the National Treasury Management Agency John Corrigan said, Ireland would take a “very opportunistic approach” in a series of steps to borrowing money from private lenders.”

“Mr Corrigan said, his agency would work to rebuild trust among investors around the world in order to be in a position to borrow even more cash so that the State could wean itself off EU-IMF financing.”

Since when does “opportunistic” and “trust” go together? Verbal apraxia.

As for Draghi’s false, over the top praise. I think he would have been better served had he reduced interest rates to a minimum of .5% yesterday. These low rates should have been in place for the last 3 years they have been dragged kicking and screaming to these decisions.

So this week the Government raised €500m from mainly foreign investors and seized almost €500m from domestic private pension funds.

Last year, Colm McCarthy compared the four-year pensions levy to ruses pioneered by the Kirchners in Argentina.

To reduce the reliance on fickle foreign investors, the Government wants to see more of the private pension funds invested locally.

The head of a small public agency, the Pensions Board, whose own employer pension cost is the equivalent of average national earnings, has given underwater defined benefit schemes that are in deficit until the end of the year to produce rescue plans.

Independent News & Media with a deficit of €141m has already signalled who will be in the firing line and existing pensioners will have priority in accordance with current law, leaving many of those that have not yet reached retirement age with significantly reduced benefits.

So expect many other companies to follow and while the typical total funding of defined contribution schemes (no guaranteed payout) is 10-12%, this compares with the 30% at a public agency such as the NTMA – – to provide for a guaranteed payout.

In the parallel universe inhabited by some, returning to ‘market,’ seems a lot more alluring than addressing an unemployment emergency.

The politicians will soon head off for their summer break, the rest of the year will be taken up with budget issues and by February, two years after winning power, any chance of significant reform will have evaporated.

It’s exciting stuff that we could have the prospect to borrow money without apparent strings – – so the dwellers of the parallel universe believe.

Forecasts for GNP growth in 2013 range from 0.5% to 1% – – and these are forecasts!

@michael H

Unemployment is completely off the agenda. Curiously neither Draghi nor Rehn threw plaudits at the government’s response to an unemployment problems so widespread and entrenched that the Official Ireland’s timid media are too embarrassed to spend time on it.

The recent CSO figures showing almost 200,000 long term unemployed should have ministers brainstorming day and night but instead the bonds and bills cloud their thinking.

Many people in Ireland are having their daily lives clouded by bills of a different nature.

@Robert Browne

Methinks you might find better targets for your substantive ire than the NTMA. NTMA has/had a sound enough international reputation. I see no reason to dispute this reputation.

If one has a quibble, perhaps its dog insufficiently barked during the credit_riot times – then again, most other dogs didn’t bark either!

@The Alchemist

& Minister Noonan & X-Minister O’Dea

SEVEN of the country’s ten worst unemployment blackspots are in Limerick city according to new figures published by the Central Statistics Office.

The figures, which were collated from last year’s Census show that Saint Mary’s Park and O’Malley Park are the only two areas in the country where more than half the working population are unemployed.

According to the figures, 55.8% of adults in the John’s A electoral division, which encompasses St Mary’s Park, stated they were unemployed when the Census was conducted in April 2011.

Meanwhile, 55.2% of adults in the Galvone B electoral division, (O’Malley Park) said they were not working.

The Ballynanty (47.2%), Rathbane (46.5%) electoral divisions also feature in the list of the country’s top five unemployment blackspots.

The figures show that Limerick city has a total of 17 umeployment blackspots – which the highest for any local authority area in the country.

Other electoral divisions listed as being unemployment blackspots include Prospect A (46.4%) Glentworth C (46.1%), Abbey C (44.7%), John’s B (43.3%), Kileely A (42.7) and Shannon B (41.9%).

In addition to having the highest number of uneployment blackspots, the Census figures also reveal that Limerick city as a whole had the highest unemployment rate in the country in April 2011 at 28.6%.

Ireland’s Success Story!

In case you missed it, the ECB reaction to yesterday’s t-bill sale

“Draghi: Ireland is a euro area country that, through extraordinary efforts, has run a programme which is on track – so much so that Ireland returned to the markets today, if I am not mistaken. This is much earlier than anybody could have expected until two or three months ago. Even though this might not yet be part of a regular extended programme for a long period of time, I think that this success should be properly celebrated, and it is a testament to the determination of the Irish government and the capacity of the Irish people to understand and “own” this programme and make the needed sacrifices. I think this is very important. Actually, it is so important that an event like this could be one of the factors that are making the financial environment nowadays a little less tense than it was a month ago. I think this ought to be taken into account. ”


The policy is to call them scumbags and hope something turns up and when it blows up throw money at the problem

The future unemployment issue (or the continued loss of ‘normal’ employments) was flagged over two decades ago. Since it was a ‘future’ matter it was ignored in time-honoured political behaviour. Now that the future has arrived, displacement behaviour and hubris are the only political options available.

Our lack of employments will worsen. It was already intractable. The issue is also being felt in all western developed economies. Unless we can clone virtual workers ASAP we’re in economic and financial Shitsville. Oh dear! We already have those virtual folk – the’re called robots. 😎

Make friends with folk who own a farm or an allotment. Learn to grow your own food and collect rainwater. Being a good knitter would be a bonus. Access to fuel will be a big problem in Ireland. But sure who cares. Its all in our future and that’s awfully far away. Duh!

There is really no fuel problem in Ireland.
If our forefathers had access to such energy densities in the past they would have been on the Pigs back.
However we have a very severe monetary problem in this country – the money tokens do not even remotely accuretly convey the economic input / output price signals.
Just imagine if the country had a constant 10 units of energy that is equivalent to todays consumption.
But the goverment had printing power.
We would most probally have access to the same 10 units of energy tomorrow but the energy could be better used – such as for rational and I mean rational capital growth.
In practise the private car would become a transport system for your local GP and upwards while the Buses and Trains would turn Japanese.
This would leave more capital available to buy more buses and build more railways.

Instead our ministers act as Bag men for the Banks as their credit money “investments” would be shown to be even more non optimal the more money was printed by goverment.
Reading De paper today……
Shatters outbursts and actions lately are way out there man.

Who cares about bank debts , diamonds, gold and stuff ? – the collection of bank debts is destroying the physical economy of commerce.
Its getting in the way of efficiency.
Money as a medium of exchange.

Meanwhile he wishes to reduce the defence forces even further.
In the event of a natural disaster what can a nation do ?

There is something deeply wrong with this goverment – indeed all Irish Goverments.
They actually don’t govern in the interests of the people , they govern in the interests of the banks and their disastrous civilisation ending credit money system.

You don’t save real wealth by making more soldiers unemployed – you save wealth by going back to the Punt.
We need a 2-8 to 1 leverage system via printing.
This will dramatically reduce our high value euro money exports.

This is not rocket science folks.
Although one would think the purpose of this deflation is to simply get the Gold.

Energy is defined as the ability to do work.

Ever since the late 18th / early 19th century capital has been far superior to Labour in its ability to do work.
You have access to 100 horses or more when you drive to work in your modern chariot.
We no longer live in a classic slave state.
However the forces of capital have conspired to use most of us as conduits rather then sentient human beings in their quest for this power which is now expressed in a monetary form.

A massive decrease in new private cars sold in June. (CSO)

“Decrease of 40.7% in new private cars licensed in June
There were 5,481 new private cars licensed in June 2012, compared with 9,240 in June 2011, a decrease of 40.7%.”

This could actually be a good thing if Bus and rail passenger numbers were at record high levels such as the more optimal UK juristiction – but they are not.
(Ok….. the BoE does not actually print the stuff but keeps the yields down)

In Europe they do things the hard way.
Instead of Goods substitution as in UK you simply run out of tokens to do anything or go anywhere – a classic deflation.

Private Car regs have already gone past the Total Y2009 low of 54,000+ but it looks likely car regs will be lower then Y2010 / Y2011 confirming the massive structual shift in the market post 2007/8.

The car fleet is ageing rapidly me thinks……and yet the Euro boys continue to stop the flow.
Why ?
There is simply no reason why you should run out of money tokens.
The wastage of physical capital in Europe must be enormous.
All to save metaphysical capital.
Its not logical captain.

Seriously Dork more about fuel, cars and trains on a thread about treasury bills!

@ Dork: In respect of an ‘energy shortage’ I was referring to the overall aspect in terms of our current usage – which cannot continue as is. A