NTMA unsure of future help from ECB when Ireland exits bailout

The Government’s debt agency said it still does not know what is needed to ensure the country gets financial support in the bond markets from the European Central Bank (ECB) at the end of the bailout.

That’s despite Michael Noonan giving his strongest hint yet that he wants to avail of the ECB’s so-called “outright monetary transactions” (OMT) support scheme when the Irish bailout ends in December.

At an event in Brussels on Monday, the Finance Minister said he thought Ireland would be eligible for the OMT scheme after one more bond deal. But the minister’s own authorities have told bond investors they are still in the dark about how the scheme would actually work.

Under the OMT proposals the ECB can potentially buy unlimited amounts of the bonds of a qualifying member state.

The idea is that such action would keep down borrowing costs and make it easier for governments such as ours to finance themselves on the markets.

However, the scheme has never been tried, and it is still not clear what a government has to do to secure the support.


In the latest of its regular updates to bond investors, John Corrigan’s NTMA admits it is not so clear on the eligibility criteria.

“Clarity on Ireland’s eligibility for so called Outright Monetary Transactions (OMT) would be helpful,” the National Treasury Management Agency (NTMA) said in a note to investors .

The NTMA hinted that its next bond deal is likely to be either a dollar-denominated bond or an inflation-linked deal.

Dollar bonds are regarded as an attractive investment for investors in the US, but also in Asian and the Middle East. Inflation-linked debt provides holds with an extra degree of investment protection.

The NTMA said Ireland’s financial standing could be improved if the EU acts on last year’s apparent commitment to break the “vicious circle between banks and sovereigns”, which means a deal from Europe on sharing the cost of the bank bailouts.

Clarity on eligibility for OMT would be “helpful”, as would progress toward a full banking union, which would be supportive of wider stability, the NTMA update said.