NTMA to raise €750m this week despite poor markets

The National Treasury Management Agency (NTMA) is to raise €750 million in new long-term funding on Thursday, despite weakness on international markets.The agency is to auction a bond maturing in 2030, with the amount to be raised less than the €1 billion raised in other auctions this year.

The NTMA is pushing ahead with the auction despite nerves on international bond markets. Government bond prices fell across the board and interest rates – or yields – rose in recent trading sessions, with expectations increasing that the US Central Bank is about to raise interest rates again. With better-than-expected Chinese manufacturing figures on Tuesday morning also easing fears about the growth outlook, bonds remained under pressure.

Irish long-term bond interest rates rose to their highest level in four months yesterday, while remaining very low by historical standards. Ten year bond interest rates - generally used as the benchmark - were around 0.66 per cent yesterday, up from just over 0.3 per cent at their low at the end of June.

The NTMA has auctioned its benchmark 2026 Government bond on a number of occasions this year and also a shorter term 2022 bond. Its decision to move to a longer bond may be designed to attract a slightly different group of investors. The NTMA has already raised €7.5 billion this year out of its annual target of €6 billion to €10 billion so it is not under pressure to raise significant funding in the later part of the year.