NTMA raises €6bn amid record demand for Irish debt

The Republic attracted record high demand on Tuesday for a 10-year bond issue that raised €6 billion.

The move raised 50 per cent more than market sources had suggested on Monday that the State’s agency would be looking to generate as it closes in on its funding target to shore up Government finances as a result of the Covid-19 pandemic.

The issue drew €66 billion of demand, twice the previous record for an Irish sovereign bond. The funds were raised at a yield of 0.285 per cent and the order book included about 400 separate interested parties.

“The continued strong demand among investors for Irish sovereign debt created an opportunity for us this week to execute our third syndicated transaction of 2020,” said Frank O’Connor, NTMA director of funding and debt management.

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“Following today’s transaction, we have now raised €18.5 billion from bond issuance this year, more than 80 per cent of the mid-point of the €20 billion-€24 billion funding range we have guided for the full year. This gives us significant flexibility and leaves us in a healthy position to meet our remaining requirements over the second half of 2020.

“Our borrowing programme is benefiting from a range of supporting factors: improvements in our sovereign credit ratings; our smoother and longer debt maturity profile; and the accommodative stance of the ECB,” he said.

The fundraising goal was revised up in April from an earlier target of €10 billion-€14 billion to fund extra spending and make up for lost tax revenue from the shutdown of the economy, which is now being unwound at a slower pace than much of Europe.

Peers

Euro zone peers Greece and Spain also drew strong demand for bond sales on Tuesday, as very generous central bank stimulus measures, including from the ECB last week, and an EU recovery fund, have boosted appetite for non-core euro zone debt.

The Republic expects the disruption to turn a budget surplus last year into a deficit of between 7.4 per cent and 10 per cent of gross domestic product this year. Data last week showed the tax intake was unexpectedly stable by the end of May, mainly thanks to bumper corporate tax returns.

The NTMA mandated Barclays, BNP Paribas, Danske Bank, Davy, NatWest Markets and Nomura to sell the bond. – Reuters