NTMA plans to raise up to €4bn with bond issue

The National Treasury Management Agency is planning to raise between €3 billion and €4 billion this week as part of a syndicated bond transaction.

The State agency announced yesterday that it had mandated Barclays, Davy, HSBC, JP Morgan, Nomura and Royal Bank of Scotland as joint managers for a seven-year Euro Reg S benchmark transaction.

It is understood that the bond offering could be launched and priced as early as today. Market sources indicated that the yield on this issuance could be as low as 0.85 per cent. This would mark a record low in terms of fundraising by the State.

On December 22nd, the NTMA said it planned to issue €12 billion to €15 billion of long-term bonds over the course of this year. This was to include at least one syndicated bond deal.

Subject to market conditions, the NTMA added that it might also offer investors the opportunity of switching some of their holdings of the 4.60 per cent Treasury Bond due to mature in April 2016 into longer-dated bonds. It will also continue to issue treasury bills during 2015.

The NTMA is due to redeem about €2 billion worth of bonds that will mature this year and around €8 billion in 2016.

The NTMA is also seeking to repay some of the loan facility made available by the International Monetary Fund in late 2010 as part of the country's financial bailout programme.

The agency completed the first tranche of the early repayment of these loans, with the redemption of €9 billion in December. This was almost 40 per cent of Ireland’s €22.5 billion IMF loan facility. Another €9 billion is expected to be repaid by the NTMA this year, which would take care of all scheduled repayments to the IMF up to January 2021.

There was some surprise in the markets that the NTMA is proceeding with this bond issue this week in advance of a possible upgrade by ratings agency Moody’s, which will issue its latest review of the sovereign on January 16th.

However, the NTMA raised €3.75 billion on January 7th last year, some 10 days in advance of an upgrade by Moody’s.