NTMA raises €1.5bn in bond auction

The National Treasury Management Agency (NTMA) raised €1.5 billion in the first of 11 scheduled bond auctions for the year.

The agency sold €500 million of 4 per cent debt maturing in 2014, and €1 billion of 5.4 per cent debt maturing in 2025.

Investors bid for 3.9 times the 2014 debt offered and three times the 2019 securities offered, the NTMA said. Total bids of €4.9 billion were received.

The NTMA has a funding target of €20 billion in 2010 to cover the country's budget deficit of €18.7 billion and a refinancing requirement of €1.2 billion.

The agency raised €35.4 billion in 2009, of which €5 billion was pre-funding to this year.

Chief economist with Bloxham stockbrokers Alan McQuaid said the auction result was "extremely impressive". He said Irish bonds were likely to fare better than those of many other European countries this year, as the NTMA has already raised more than half the projected target funds it needs for 2010 when the surplus funds from last year were taken into account.

"One has to admire the NTMA's opportunism in exploiting the current goodwill towards Ireland within the financial markets that appears evident following the fiscal austerity measures announced in the December Budget," he wrote in a note.

"However, the worry for Ireland and other 'peripheral' Eurozone countries is that if Greece's problems snowball out of control, there is a risk that the 'non-core' Euroland countries will all be 'tarred with the same brush' irrespective, leading to a significant widening of bond yield spreads over Germany in the coming months.

"Therefore, the NTMA’s decision to ‘strike while the iron is hot’ is a positive step, significantly easing the funding burden over the remainder of 2010."