FINANCE:A SENIOR official in the National Treasury Management Agency (NTMA) has said the Government may be able to issue debt on more favourable terms if voters backed the Lisbon Treaty and the Nama scheme went ahead.
Although the market for Irish sovereign debt improved in recent months as plans advance to establish Nama, the Government is still perceived to be paying penalty interest rates as it borrows €400 million per week to run the State.
This is reflected in the differential or spread between the price of Irish sovereign debt and German debt, the prime measure of the market’s perception of a European economy’s condition.
“Irish spreads are still too wide,” said Oliver Whelan, director of funding and debt management at the NTMA.
“They can narrow much more in the event of a vote in favour of the Lisbon Treaty and the passing of the Nama legislation.”
Mr Whelan made his remarks on Wednesday at an event to mark the opening by the Bloomberg news agency of its new office in Dublin.
Earlier this month, Minister for Finance Brian Lenihan said a second rejection of the treaty would trigger a rise in national borrowing costs.
The spread between the price of Irish and German bonds has declined to 1.43 percentage points from 2.84 percentage points in March, the highest level in at least a decade. As late as July the spread was 2.1 percentage points.
The NTMA is borrowing about €25 billion this year on international markets. – (Additional reporting: Bloomberg)
