NTMA cuts Irish State target for loans to €8bn

The National Treasury Management Agency (NTMA) has lowered the target of how much it will raise for the State this year to €8 billion. This follows its success in raising €3.75 billion yesterday from the issuance of a syndicated 10-year Treasury Bond.

It was Ireland’s first entry into international debt markets since exiting the EU-IMF bailout programme on December 15th. The funds were raised at 3.543 per cent and followed orders of €14 billion from investors.

The NTMA, which manages Ireland’s national debt, had previously said it would seek to raise up to €10 billion this year to help maintain a cash buffer that could fund the State for up to 15 months.

Its success yesterday has given it the confidence to lower its fundraising target for the year on the basis that Ireland will be able to regularly tap investors and does not need to stockpile too much cash.

Minister for Finance Michael Noonan said the level of investor demand showed there was "strong confidence" among investors for Irish bonds post our bailout exit and justified the decision not to seek a precautionary line of credit from the troika.

“It is particularly noteworthy that the orders of €14 billion for [yesterday’s] sale exceed the €10 billion that could have been available under a precautionary programme,” he said.

Sentiment
The agency could have raised the full €8 billion in yesterday's issuance but instead decided to stagger its fundraising activities for this year to improve liquidity for investors and potentially avail of lower yields as sentiment towards Ireland improves and the economy continues to grow.

"We are confident but not complacent," is how NTMA chief executive John Corrigan summed it up. "Our plan would be to have a modest series of auctions through 2014." He reiterated that Ireland is fully funded for 2014 and that the NTMA is now looking at putting in place sufficient funding for "2015 and beyond". This includes trying to unwind a €10 billion bond redemption due in April 2016.

The NTMA plans to offer some of these investors an opportunity to switch into other bonds with a longer timeframe so that the State is not faced with one big-bang payment in two years time. “There is no rush on it,” Mr Corrigan said. Yesterday marked a return to normal market access by Ireland having been shut out of capital markets since 2010.