June 20, 2018 / 10:35 AM / in 5 months

Joint euro zone govt bonds could be damaging for liquidity - Irish debt agency official

LONDON, June 20 (Reuters) - The idea of issuing joint euro zone government bonds would be difficult to construct in practice and could be damaging for liquidity in wider debt markets, Anthony Linehan of the Irish debt management office said on Wednesday.

Linehan, who is deputy director, funding and debt management, at Ireland’s National Treasury Management Agency, said that merging all the different euro zone issuers into one security would be a challenge.

“I question therefore whether it would be a success. But these are political decisions and decisions for the people of Europe,” he said at a Euromoney conference in London.

Speaking at the same conference, Teppo Koivisto, director of finance and head of finance division, state treasury, Finland said: “As a small issuer I would have concerns. In a worst case scenario we would have a less liquid government bond market and a more liquid safe asset market.”

Koivisto also said Finland would consider cutting auction sizes and being more targeted with bond sales after the ECB ends its 2.6 trillion euro bond-buying scheme at the end of this year. (Reporting by Abhinav Ramnarayan and Marc Jones; Editing by Dhara Ranasinghe)

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