NTMA Bond Sales - Who is buying them?

kippy

Hi all,
just a couple of things I have heard of late on the radio (no links but I assume the information is out there)
There have been some interesting stories about the NTMA auctioning/selling a number of billions at this stage (includeing 500 million today I believe) of Irish Sovereign bonds, of varying maturity dates.
This is seen as a good sign in relation to a return to the markets full on next year.

In another discussion on Newstalk perhaps two mornings ago in relation to the financial results of BoI, it was said that state owned Irish banks moved from holding 17% of Irish sovereign debt to holding 23% of it.

Perhaps I am being a bit naive here, but is it possible those "international Markets" to which we rely on are not actually purchasing up our sovereign debt at all and that the debt is in fact getting purchased (directly or indirectly) by us (via the state owned banks)?
If so, are the markets being intentionally manipulated by the state in order to make our position appear better than it actually is?


Maybe I am way of the mark, and explanations gratefully accepted.

antoobrien

kippy wrote: »

Hi all,
just a couple of things I have heard of late on the radio (no links but I assume the information is out there)
There have been some interesting stories about the NTMA auctioning/selling a number of billions at this stage (includeing 500 million today I believe) of Irish Sovereign bonds, of varying maturity dates.
This is seen as a good sign in relation to a return to the markets full on next year.

In another discussion on Newstalk perhaps two mornings ago in relation to the financial results of BoI, it was said that state owned Irish banks moved from holding 17% of Irish sovereign debt to holding 23% of it.

Perhaps I am being a bit naive here, but is it possible those "international Markets" to which we rely on are not actually purchasing up our sovereign debt at all and that the debt is in fact getting purchased (directly or indirectly) by us (via the state owned banks)?
If so, are the markets being intentionally manipulated by the state in order to make our position appear better than it actually is?


Maybe I am way of the mark, and explanations gratefully accepted.

http://www.ntma.ie/business-areas/funding-and-debt-management/government-bonds/

kippy

antoobrien wrote: »

http://www.ntma.ie/business-areas/funding-and-debt-management/government-bonds/

Does that actually say who or what entity has purchased these latest bonds? (Sorry cannot spot it)
If Irish banks are not on the "owners" list, how did their exposure to Irish Soverign debt go up 6 or 7 percentage points?
Indeed, one would wonder how much soverign debt do the state owned Irish banks hold?

antoobrien

kippy wrote: »

Does that actually say who or what entity has purchased these latest bonds? (Sorry cannot spot it)

No, that kind of information is rarely published. A body can say we bought some, as is the case here (or the US based investor who has €6bn worth of our debt), but it'd be unusual.

Anyone can buy them off the primary dealers

kippy wrote: »

If Irish banks are not on the "owners" list, how did their exposure to Irish Soverign debt go up 6 or 7 percentage points?

There's no owners list, they can however buy them.

kippy wrote: »

Indeed, one would wonder how much soverign debt do the state owned Irish banks hold?

It'll be in their balance sheets - CB statistics & financial statements. Off you go.

roro2

The figures are reasonably transparent - it's certainly not a case of the markets being intentionally manipulated by the state - I think the markets are a bit too sophisticated for that! The banks report these figures twice a year in their accounts, for example BOI increased their holdings of Irish government bonds from €3.2bn at end-2010 to €4.65bn at end-2011. It would be similar at AIB and the increases would have continued to some extent this year. The Central Bank report overall data more regularly but its not split by state-owned banks. Significant holdings of sovereign debt is normal and Irish bank holdings would be less than in other European countries - I think about 50% of Spanish debt is held by its banks. Obviously it's better to see foreign purchases though.

Scofflaw

kippy wrote: »

Does that actually say who or what entity has purchased these latest bonds? (Sorry cannot spot it)
If Irish banks are not on the "owners" list, how did their exposure to Irish Soverign debt go up 6 or 7 percentage points?
Indeed, one would wonder how much soverign debt do the state owned Irish banks hold?

Let's see. "Irish banks" own about €21.3bn of long-term government debt as of end September, which is 24% of long term sovereign debt holdings, up from 19.9% at the beginning of the year and 17.23% this time last year.

Total "loans to general government" by the covered banks, on the other hand, is €27.592bn, down from €29.2bn at the start of the year, and €29.1bn a year ago. Presumably, then, what has happened is that the covered banks have moved some money from short term government debt to long term government debt, rather than increasing their overall exposure as such.

And it does seem to be the covered banks who are exposed to Irish sovereign debt, rather than, say, the IFSC banks or foreign-owned banks in the domestic market like Rabobank, because the total "loans to general government" for all banks in the State is only €27.998bn, only about €406m in the difference, which is accounted for by domestic but non-covered banks.

cordially,
Scofflaw

s1986coc

http://www.centralbank.ie/polstats/stats/sis/Documents/Holdings%20of%20Irish%20Government%20Long-term%20Bonds.xls

Victor

You have to ask the question, are they owned by the bank or are they merely managed by the bank as part of an investment/pension fund.