Ireland’s central bank is weighing selling more of its holdings of the nation’s bonds than scheduled this year, as yields on Irish benchmark notes hover at record lows, a person with knowledge of the matter said.
Last year, the state gave the central bank 25 billion euros ($34.7 billion) of government bonds, as part of a plan to push out the cost of bailing out Anglo Irish Bank Corp. The Dublin-based bank, which planned to sell at least 500 million euros of the notes by the end of this year, may offload more, according to a person, who asked not to be identified, as a final decision hasn’t been taken.
The central bank was handed the bonds to replace promissory notes, a form of shorter-term IOU, used as collateral for emergency funding which averted the collapse of Anglo Irish, the lender which came to symbolize the nation’s boom-to-bust. Selling bonds may help appease the European Central Bank, which said last month that the Irish accord raises concerns as the region’s central banks are banned from financing governments.
Central bank spokeswoman Maeve McLaughlin declined to comment.
Ireland’s benchmark 10-year yield fell to a record low of 2.81 percent yesterday, and rose to 2.82 percent today.
The central bank said yesterday it sold 350 million euros of government bonds in 2013, leaving another 150 million to be sold to reach its minimum target by the end of the year.
Irish Central Bank Governor Patrick Honohan declined to say at a press conference in Dublin yesterday whether the bank had sold any further securities this year.
Honohan said yesterday he would only announce the bond sales once a year, when the organization released its annual report. The government is liquidating Anglo, which was renamed Irish Bank Resolution Corp. after it was nationalized.
In 2013, the state paid the central bank 943 million euros of interest on about 43 billion euros of state securities used to refinance its emergency Anglo Irish funding. Ultimately, much of the interest flows back to the government, as the bank pays a dividend to the state.
John Corrigan, head of Ireland’s debt agency, said on April 15 that the central bank should stick to the agreed bond sales program unless there is a “significant” improvement in the economy.
To contact the editors responsible for this story: Edward Evans at firstname.lastname@example.org Dara Doyle, Heather Harris