A benchmark 10-year bond is next on the agenda for the National Treasury Management Agency (NTMA), following the successful sale of €2.5 billion in a syndicated tap deal on Tuesday.
Noting that Ireland doesn’t currently have a 10-year bond, John Corrigan, chief executive of the NTMA, said yesterday that it could be a possibility in 2013.
“It would be nice to have a 10-year bond . . . it’s on our wish list,” he said, speaking at the annual review of the agency, adding that the NTMA plans to raise €10 billion from the markets this year.
A syndicated dollar deal is also a consideration.
Commenting on Tuesday’s sale, Mr Corrigan said the agency was very happy with the spread of investors achieved in the deal, with “all but 1 per cent” going to “real money investors” such as pension funds, insurance companies and banks.
He also said the NTMA was very happy with the yield, or cost of borrowing, attained, when compared with pre-crisis funding.
Rating still an issue
“We would have been challenged to borrow at that rate even with a Triple-A rating,” he said. However, he added that the country’s rating was still an issue.
“There is still a lot of work to do there,” he said, adding that the rating Moody’s had on Ireland was “depressingly low”.
Noting that the proceeds of yesterday’s deal would be kept on deposit earning a low yield, Mr Corrigan said it would be “hard to match” the cost of borrowing, but that the NTMA was seeking to strike a balance between funding while conditions were good, and building up a buffer.
“If the cost of carrying is important, then the cost of not carrying it is equally important,” he said, adding that, “the world is in a very uncertain place and we’re in a sweet spot at the moment”.
The NTMA will recommence its monthly treasury bill auctions on January 17th, raising €500 million.
Viewpoints The NTMA on . . .
The disposal of Bord Gáis:"We're very much on track, said Eileen Fitzpatrick, director of NewERA, which is managing the Bord Gáis divestment.
She said that NewERA, which also has responsibility for representing the Government’s interest in its asset disposal programme, has also started preliminary work on a disposal of Coillte’s assets, and noted that the agency has seen a “healthy degree of interest” in State assets from potential buyers.
The State Claims Agency :According to the NTMA, the estimated liability of active claims stood at €1.1 billion as of the end of December 2012, 86 per cent of which are in relation to clinical claims.
The remainder are accounted for by employer, public and property damage liability claims.
It expects the State Legal Costs Unit within the agency to be operational next month.
Public private partnerships:The National Development Finance Agency has started an "intensive market engagement" to attract interest from investors and contractors in PPPs in the education, health and justice sectors under the Government's €2.25 billion stimulus package.
The NII/Newlands Cross PPP project is expected to reach a financial close early this year.
National Pension Reserve Fund:The NPRF's portfolio, excluding its investments in Bank of Ireland and AIB, returned 7.3 per cent in 2012, or 3.7 per cent a year since 2001.
The fund’s portfolio of bank shares increased by 10.4 per cent.
The total value of the fund was €14.7 billion as of the end of last year.
