NTMA plans to borrow as little as €7bn next year as it opts out of short-term debt market

The National Treasury Management Agency (NTMA) said it plans to raise between €7 billion and €11 billion in the international bond markets next year, as the Government aims for a small budget surplus next year and the level of debt due for repayment remains relatively low.

The NTMA aims to carry out one so-called syndicated bond deal through a group of investment banks and securities firms, as part of its 2023 fundraising. It has been among the first debt agencies in the euro zone to launch such a deal each January in recent times.

The agency plans to opt out of the short-term debt market – or what is known as the treasury bills market – during 2023.

“Our borrowing plans for 2023 reflect our strong cash balances, projections of an exchequer surplus and a relatively low level of maturing debt in the coming year,” said the NTMA’s director of funding and debt management Dave McEvoy.

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“We continue to have considerable flexibility in meeting Ireland’s borrowing requirements. This stems from our long-standing strategy of pre-funding, having one of the longest maturity profiles in Europe and lower debt redemptions over the medium term.”

Mr McEvoy added: “While recognising the potential for continued uncertainty, we are entering 2023 from a position of strength.”

The market interest rate – or yield – on the Irish Government’s benchmark 10-year bonds currently stands at 2.36 per cent, up sharply from 0.07 per cent 12 months ago, as euro zone bond investors price in a series of official rate hikes from the European Central Bank (ECB) to rein in soaring inflation.

The NTMA decided in September not to carry out any further bond sales for the remainder of 2022, after the Government signalled it was on track to record a budget surplus and as borrowing costs in financial markets were rising.

The agency raised €7 billion of bonds earlier in the year – compared to its original target of between €10 billion and €14 billion.

Cantor Fitzgerald fixed-income strategist Ryan McGrath highlighted in a note to clients on Wednesday that the NTMA held almost €27 billion of cash at the end of October. However, it only faces €9 billion of debt maturities next year, he noted.

This includes the NTMA’s plans to start paying back the €40 billion-plus EU part of the State’s international bailout 12 years ago. The agency plans to repay €2 billion of so-called European Financial Stabilisation Mechanism (EFSM) loans in 2023, according to investor presentations on its website.