NTMA sells €3bn of bonds after receiving over €44bn of bids amid investor rush

The National Treasury Management Agency (NTMA) sold €3 billion of bonds on Thursday after securing more than €44 billion of orders from international investors as they seek to lock in relatively high interest rates ahead of an expected easing of central bank rates this year.

The new 10-year bonds were priced to carry a market interest rate, or yield, of 2.651 per cent, the NTMA said.

Barclays, BNP Paribas, Cantor Fitzgerald Ireland, Citigroup, Danske Bank and JP Morgan are the joint lead managers of the syndicated bond sale for the NTMA, which is led by chief executive Frank O’Connor.

The €3 billion of 10-year bonds on offer will cover half of the minimum €6 billion the NTMA is planning to raise in the long-term bond markets this year. The maximum target has been set at €10 billion.

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“Today’s issue of a new 10-year benchmark bond – our first new 10-year bond since 2022 – is an encouraging start to our 2024 funding programme and highlights the ongoing strong investor demand for Irish sovereign debt,” said Dave McEvoy, director of funding and debt management at the NTMA.

“At €3 billion the amount issued reflects our relatively limited borrowing requirement this year. Given our healthy cash balances and the relatively low level of maturing debt, our funding position is strong. We have a large degree of flexibility in meeting the Exchequer’s funding needs over the remainder of the year.”

Sales of bonds in the European primary market from governments, agencies and companies look set to reach record levels this week, according to Bloomberg. Demand from investors comes as they seek to lock in higher interest yields amid expectations that central banks will cut official rates at pace this year. Money markets are betting on more than five quarter-point interest rate cuts by the European Central Bank, starting in April.

Spain, Belgium, Italy and Estonia are among euro zone countries that have launched large bond deals this week.

The market interest rate, or yield, on the State’s current benchmark 10-year bonds pulled back from a higher of 3.357 per cent in October to 2.19 per cent at the end of last year. However, it has subsequently edged up to 2.5 per cent as bond market investors have reined in expectations since the start of the new year on how quickly the ECB will move to cut official rates this year.

NTMA is sitting on healthy cash balances of almost €25 billion, the Department of Finance forecasts the general government surplus will amount to €8.4 billion this year, down marginally from €8.8 billion in 2023, and the agency has to deal with about €9 billion of existing debt that will fall due this year.

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