THE NATIONAL Treasury Management Agency has yet to decide if it will go ahead with plans to borrow up to €1.5 billion from the capital markets for the State later this month.

Since the beginning of the year, the agency, which manages the national debt, has borrowed between €1 billion and €1.5 billion every month through issuing Irish Government bonds.

The NTMA normally issues the bonds on the third Tuesday of every month, but yesterday the agency said that it may not proceed with its May issue if the market turmoil sparked by the Greek crisis continues.

A spokesman for the NTMA said yesterday that the agency’s view is that it is already well funded for the rest of 2010.

He explained that the State needs to borrow €20 billion this year. The agency has already raised €12 billion through various bond issues, and has brought €5 billion forward from last year, giving a total of €17 billion. At the same time, it has €20 billion in cash balances.

“As a result we can be a bit more selective about future bond auctions,” he said. “We’ll reflect on the situation closer to the date.”

The spokesman said that no decision has been made and added that a lot will depend on whether the turbulence in financial markets settles down or continues in the near future.

Discussing the situation yesterday, the NTMA’s head of funding, Oliver Whelan, left open the possibility that the agency may auction bonds this month. He explained that it works to its advantage to be seen by investors to be active in the market.

The agency’s chief executive, John Corrigan, had earlier signalled that it was considering postponing the auction and described current bond pricing on the markets as “irrational”.

A number of analysts suggested that this would be the wisest move given market conditions. Alan McQuaid, chief economist with stockbrokers Bloxham, pointed out that the NTMA was in a position to skip the May auction entirely if it wanted. “Their funding needs are very low,” he said.

The Greek crisis has sparked fears among investors about lending money to countries in the euro zone, and particularly heavily indebted nations such as Ireland.

This means that interest rates offered on the bonds would have to be increased to deal with investors’ fears about the perceived risk of lending to the Republic.