NTMA prepares for bond sale

The National Treasury Management Agency (NTMA) will sell between €1 billion and €1.5 billion of bonds in an auction on January 19th, it said today.

The sales is the first of a series of 11 monthly auctions of bonds, aimed at raising €20 billion in funding for 2010.

The target is a 40 per cent reduction on the €33.7 billion issued in 2009. The NTMA said last week in its end of year review that the funding requirement for 2010 would be lower than last year's due to a smaller projected Exchequer deficit of €18.7 billion and lower refinancing requirements.

Some €5 billion worth of bonds were sold yesterday, accounting for 25 per cent of the year's funding programme.

The bonds, which mature in October 2020, had a yield of 1.62 per cent higher than the yield at the equivalent maturity date on the German bond curve.

"It's a very crowded and volatile market and yet Ireland managed to sell their bonds quite successfully, which shows they are confident," said Robin Marshall, director of fixed income at Smith & Williamson Investment Management.

"I find what Ireland offered quite attractive given their political willingness to consolidate their fiscal position."

Spain, with the highest unemployment rate in the euro region, this week priced €5 billion of 10-year bonds to yield 56 basis points more than the swap rate. The European Commission forecasts Spain's debt will rise to 66 percent of gross domestic product next year, up from 36 per cent before the financial crisis.

Poland, Belgium and Austria also issued debt through syndicated offerings, with Poland raising €3 billion from the sale of 15-year bonds this week. Belgium issued €5 billion of 10-year notes and Austria sold €4 billion of seven-year debt.

Additional reporting - Bloomberg