NTMA receives €8bn of bids for 15-year bond sale

The National Treasury Management Agency (NTMA) received over €8 billion of bids for a new 15-year bond it was selling via syndication on Tuesday as it starts refinancing the first portion of its bailout loans from the International Monetary Fund with cheaper market funding.

Ireland, which has seen its 10-year bond yields halve since completing its EU/IMF bailout last year, had received demand in excess of €8.2 billion , according to a lead banker on the deal.

That was after it tightened price guidance to 102 basis points over mid-swaps, implying a yield of 2.52 per cent, below the 3.54 per cent it sold new 10-year paper at in a similar deal in January.

The demand was not seen as being as high as January when investors bid more than €14 billion, nearly four times the size of the final €3.75 billion issue.

“Ireland looks ok but it’s not a bunfight. It’s coming super tight and if you look at the periphery for eurozone sovereigns, the rally has been more in the three- to five-year part of the curve, not so much the long-end,” a debt banker said.

With investors scrambling for assets with a relatively high yield, Slovenia attracted more than €3.2 billion of demand when it sold €1 billion worth of 8-year paper last week at a mere 2.4 per cent yield.

The Irish Government has estimated that it will save around €1.5 billion on debt servicing costs over the next five years by refinancing €18.3 billion of its IMF loans in three equal tranches between now and 2016.

Dublin has won agreement from Europe to pay the IMF before it repays aid from the European bailout funds. It just needs the new Swedish government to formally ratify the amended terms in parliament before the deal is fully signed off.

Ireland, whose cost of borrowing 10-year money on secondary markets rose to a high of 15 per cent at the height of the euro zone debt crisis in 2011, is fully pre-funded through to the end of 2016 after resuming regular bond auctions this year.

With its economy outpacing the rest of Europe, Irish debt has been on a solid path towards catching up with France and Belgium - countries seen as safe bets when Dublin was shunned by the market three years ago.

Ireland expects its economy to grow by almost 5 per cent this year and the European Commission forecast on Tuesday that it would grow faster that any other EU country this year and next.

Citigroup, Danske Bank, Davy, Morgan Stanley, Nomura and Royal Bank of Scotland are joint lead managers on the sale.

Reuters reported last month that the NTMA had told investors that it would like to issue 15-year debt to begin replacing the IMF loans, which carry an interest rate of almost 5 per cent.

Reuters