NTMA hopes to resume borrowing

Ireland will return to the bond markets as soon as market conditions permit, National Treasury Management Agency chief executive John Corrigan has said.

In its 2010 review, the NTMA - the body responsible for managing Ireland's national debt - said that last year had "undoubtedly been a very challenging year".

Ireland’s national debt stood at €93.4 billion at the end of the year, while the cost of servicing the national debt was €4.8 billion, €320 million below budget, the agency said.

The NTMA raised €20 billion on the international money markets through scheduled monthly auctions between January and September last year, at which point spiralling borrowing costs precipitated Ireland's withdrawal from the bond markets, culminating in a €85 billion bailout from the IMF and EU in November.

Mr Corrigan said the agency will resume borrowing as soon as market conditions permit, as the EU-IMF programme does not preclude it from seeking to fund itself through the markets.

Ireland's benchmark bond yields were hovering at over 9 per cent today. The EU-IMF funding is being loaned to Ireland at an average rate of 5.8 per cent.  Spain, Portugal and Italy's bond yields hit the highest level in more than a month today, with the yield on Spanish debt standing at 5.5 per cent, 10-year Portuguese bond yields standing at 7.1 and yields on Italian sovereign debt reaching 4.8.

The NTMA's annual review also shows that the National Pension Reserve Fund 's (NPRF)  €9.5 billion investment in Bank of Ireland and AIB during 2010 returned -7.9 per cent, compared to 11 per cent by the rest of the fund.

Overall the NPRF - which stood at €24.4 billion at the end of December - recorded a return of 4.5 per cent in 2010.

The NPRF will provide up to €10 billion of the State’s €17.5 billion contribution to the €85 billion EU-IMF programme, after which €4.5 billion in assets will remain in the fund, in addition to the investment in AIB and Bank of Ireland.

In its review of 2010, the NTMA points out that it had achieved its borrowing target for 2010 before funding conditions deteriorated markedly during the final quarter of the year.

It also front-loaded a significant portion of its long-term borrowing programme in order to maximise the advantage to the Exchequer in terms of the cost of and appetite for Irish government debt which existed at the start of the year, the agency said.

The average cost of Ireland's long-term funding raised in the bond market was 4.7 per cent last year, up from 4.6 per cent the previous year.

In relation to the EU-IMF funding package, the NTMA highlighted the fact that the terms of the three-year EU-IMF funding programme included loans of varying maturities up to 12 years with an average maturity of seven and a half years.

"This was a key objective of the NTMA as it was important from a debt management perspective to avoid a situation whereby Ireland would be faced with a 'funding wall' upon the conclusion of the programme."

Last year, the National Asset Management Agency (Nama) - to which the NTMA provides staff and services - approved the sale of close to €2 billion in property assets held by Nama borrowers in order to pay down debts either to the agency itself or to the relevant banks.

Some 100 staff were recruited for Nama by year end and it is expected that this may increase to 150 over the course of this year.