Michael McGrath (Cork South Central, Fianna Fail)
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56. To ask the Minister for Finance the expected impact on Ireland’s annual debt servicing costs in 2015 and 2016 from the quantitative easing plan announced by the European Central Bank; and if he will make a statement on the matter. [4200/15]

Michael McGrath (Cork South Central, Fianna Fail)
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59. To ask the Minister for Finance if quantitative easing will impact on the National Treasury Management Agency’s stated policy for bond auctions this year; if they will be issuing a 30-year bond to capture the benefits of current low rates; and if he will make a statement on the matter. [4203/15]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 56 and 59 together.

The National Treasury Management Agency (NTMA) is responsible for borrowing on behalf of the Government.

On 22 December 2014, the NTMA announced that it plans to issue €12 to €15 billion of long-term bonds over the course of 2015. As a first step in that process, the NTMA, on 7 January 2015, raised €4 billion through the syndicated sale of a new seven-year benchmark bond. The funds were raised at a yield of 0.867%, a historic low.

On 12 January 2015, the NTMA announced its Q1 2015 auction schedule. Bond auctions are scheduled for Thursday 12 February and Thursday 12 March, subject to market conditions. The details are to be announced on the Monday prior to each auction.

The NTMA today 29 January 2015 completed an auction of Irish Treasury Bills, selling the target amount of €500 million. The Treasury Bills, which have a maturity of six months, were sold at an annualised yield of 0.00%. Total bids received amounted to €1.745 billion which was 3.49 times the amount on offer.

Ireland currently has thirteen benchmark bonds with maturities across the yield curve out to 2030, which incorporates the new 15-year benchmark bond issued in November 2014.  As part of its regular ongoing funding strategy, the NTMA considers issuance of various maturities subject to market developments and investor appetite.  

The NTMA will closely monitor the market following the announcement of the expanded asset purchase programme by the European Central Bank (ECB) on 22 January. In recent months, prior to the ECB announcement, Irish Government bond yields declined steadily. It is reasonable to suggest that the expectation, on the part of financial market participants, of an announcement by the ECB that it would purchase sovereign bonds was a contributory factor in the decline. The initial reaction from the market since the ECB announcement has seen a further drop in yields. The ten-year benchmark bond, maturing in March 2025, traded at 1.07% on 26 January compared to 1.24% at close of business on 21 January, the day before the announcement.

The NTMA advise that they cannot be definitive about the impact of the ECB's expanded asset purchase programme on Ireland's future debt servicing costs, as a range of other factors also matter. However if one of the implications of the programme is that bond yields remain low, this would be positive for debt servicing. The NTMA's funding strategy will continue to take account of the quantum of the funding requirement, market conditions, debt servicing implications, and feedback from Ireland's Primary Dealers in government bonds.