State raises €3.75bn in 15-year bond sale

Arthur Beesley, Economics Editor

The Government has sold 15-year bonds for the first time since 2009, raising €3.75 billion at a record low interest rate as it accelerates the repayment of IMF loans.

As the sale concluded this afternoon, Taoiseach Enda Kenny said the Government plans to repay as much as €10 billion to the IMF by the end of the year. It plan at the outset of the initiative was to pay off €6.1 billion this year.

The National Treasury Management Agency raised the money at a yield of 2.487 per cent, a record for such debt and almost three percentage points lower than the previous comparable sale which came one year before the EU/IMF bailout.

The notional book amounted to some €8.4 billion, meaning the sale was oversubscribed by a factor of 2.24.

The transaction was welcomed by Minister for Finance Michael Noonan, who said such demand showed the Government's policies were being recognised by by private investors.

The auction comes as the Government steps up preparations to retire IMF loans early.

Having set out to pay back €6.1 billion, Mr Kenny said the Government would be in a position to repay €10 billion with the bond sale proceeds and by drawing from cash reserves. "We hope to have very positive progress by the end of the year," Mr Kenny said

In a statement, Mr Noonan said the auction will further improve Ireland’s debt maturity profile going into 2015.

"The yield of 2.487 per cent is a record low yield and provides a huge vote of confidence in Ireland from investors. The yield on the 15-year bond issued by the NTMA in October 2009 was 5.472 per cent," Mr Noonan said.

The NTMA said order book included interest from more than 250 accounts, including fund managers, pension funds, insurance companies, banks and other investors.

"The strong demand from investors globally for this longer dated bond, our first 15-year maturity since 2009, demonstrates that Ireland has consolidated and enhanced its market access since making a successful return to the international debt markets earlier this year," said NTMA chief executive John Corrigan. Additional reporting Bloomberg