NTMA to sell €3bn of green bonds in early test of debt markets

Cash will be used to fund projects to help State meet greenhouse gas emission targets

The National Treasury Management Agency chief executive Frank O’Connor. Photograph Nick Bradshaw

The National Treasury Management Agency (NTMA) has hired a group of investment banks and securities firms to sell as much as €3 billion of green bonds, continuing a decade-long trend of the Irish State being among the first sovereigns to dip its toes into the international debt markets at the start of the year.

The agency said in a statement on Wednesday that it has mandated BNP Paribas, Bank of America Securities, Cantor Fitzgerald Ireland, Danske Bank, Deutsche Bank and Nomura to manage the sale of 20-year green bonds. Sources said that the NTMA plans to raise between €2 billion and €3 billion in the transaction.

The bond sale is expected to be launched on Thursday. A spokesman for the agency, which is led by chief executive Frank O’Connor, declined to comment on the planned size or timing of the transaction.

The NTMA said last month that it plans to sell between €7 billion and €11 billion worth of bonds in 2023, with no short-term treasury bill sales planned for the year.

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Green bond funds will be used to finance eligible projects, such as sustainable water and waste management, clean transportation and renewable energy deals, as the Government targets tens of billions of euro of spending on reducing the State’s greenhouse gas emissions by 50 per cent by the end of the decade, compared with 2018 levels.

Colm Ryan, head of fixed income at Goodbody Stockbrokers, which is advancing plans to become a primary dealer of Irish bonds, said that investor appetite for the bonds will be helped by the fact that the NTMA is selling longer-dated bonds than some of the other sovereigns accessing the markets early this year. Germany, Austria and Slovenia have also been among the initial wave of debt issuers this week.

“The environmental aspect of the Irish offering is also a key consideration for investors, broadening the appeal of the transaction,” Mr Ryan said.

The bond sale comes against a backdrop of a looming global recession while the European Central Bank (ECB) increases interest rates to combat runaway inflation. The ECB has also ended its bond-buying programme, known as quantitative easing.

The market interest rate on standard Irish 20-year bonds has jumped from 0.73 per cent a year ago to more than 3 per cent.

The NTMA made its first foray into the green bond market in 2018, with some €7.34 billion being allocated for eligible green project since then, according to an investor presentation posted on its website on Wednesday.

Global green bond issuance fell 19 per cent least year to almost $390 billion (€367 billion), according to figures compiled by Refinitiv, the financial markets data specialist, marking the first decline since its records of this segment of the market began in 2015.

Overall fundraising on global debt markets also declined by 19 per cent globally last year, to $8.3 trillion, as countries and corporates took a more cautious view of taking on fresh borrowings amid rising rates and slowing economic growth.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times