NTMA sells €1bn of debt as bonds rally globally

The State sold €1 billion worth bonds on Thursday, benefiting from a global rally in bonds as news of weak Chinese exports figures prompted investors to pile into safe-haven assets.

The National Treasury Management Agency priced the 10-year bonds to carry a market interest rate, or yield, of 0.495 per cent, having drawn demand for more than twice the amount of debt on offer. The yield compares with the 0.53 per cent rate at which the bonds were trading late on Wednesday.

The sale brings the amount of long-term debt raised by the NTMA this year to €7.5 billion, with its full-year target set at between €6 billion and €10 billion. The debt agency will hold its final bond auction of the year on November 3rd.

"This is a strong auction result for the NTMA," said Eamonn Reilly, a senior dealer with Davy in Dublin, adding that there was "decent" demand from investors in the 10-year bonds ahead of the auction "which helped set up the market."

Quantitative easing

European bonds have been under pressure in recent weeks, amid concerns about that the European Central Bank may gradually wind down its bond-buying activities before its €1.7 trillion quantitative easing programme is due to conclude in March.

This programme helped Irish 10-year bonds hit an all-time low, below 0.3 per cent at the end of September, compared with a euro-era high above 14 per cent at the height of the financial crisis in 2011.

However, interest in bonds rallied globally on Thursday after it emerged that Chinese exports fell 10 per cent in September, more than three times the pace expected by economists, with imports also declining by almost 2 per cent.

"This comes on the heels of weak South Korean trade data, and it definitely make us worry about to what extent global demand is improving," said Luis Kujis, head of Asia economics at Oxford Economics in Hong Kong.