NTMA to raise €750m in bond markets

Fiona Reddan and Cliff Taylor

The National Treasury Management Agency (NTMA) is set to raise €750 million in new six year borrowings on Thursday, its first move into the market since the creation of the new government. The announcement took the market somewhat by surprise,as most analysts had expected that the NTMA would raise further ten year borrowings.

Last month the NTMA sold €750 million in 10-year notes at a record low interest rate of 0.817 per cent. This compares with a 1 per cent rate attached to similar bonds in mid-February.

Dealing in Irish bonds has slowed in recent weeks, with investors awaiting the formation of the new Government and also the outcome of the Brexit referendum. Market sources say that there has been no significant selling of Irish bonds, but that new investors have been slow to come into the market.

Selling shorter term debt with a six year maturity may widen the pool of possible investors for this week’s issue - bringing in more banks, as well as traditional investment funds - the sources said. With the NTMA having already lengthened out the average maturity in recent long-term issues, it can afford to raise shorter-term debt this time.

The auction, of the 0.8 per cent Treasury Bond 2022, will open at 8 am on Thursday and will be confined to recognised primary dealers.

The last sale of the 2022 bonds, in May 2015, saw the bonds sold at an average yield of 0.81 per cent and with bids accourting for 2.7 times the amount of stock on offer.

Provided that this auction is fully subscribed, the NTMA will have sold some €5.5 billion in bonds so far this year, edging closer to its full-year target of between €6 and €10 billion. The NTMA is not committed to any further longer-term date issues this quarter and may wait until the outcome of the Brexit referendum before moving back into the market again.