NTMA to test markets with €3bn bond issue

and FIONA REDDAN

The National Treasury Management Agency (NTMA) is expected to test the appetite of capital markets today for Irish sovereign bonds, possibly to the tune of €3 billion.

The agency said yesterday that it had appointed Barclays, Citi, Danske Bank, Davy, Deutsche Bank and Morgan Stanley as joint lead managers for a 10-year "euro benchmark transaction".

No indication was given of how much would be raised but sources speculated that it could be about €3 billion. The agency said the transaction would be priced subject to “market conditions”. This would be the first bond issue by the agency since the State exited the IMF-EU bailout on December 15th.

The agency said last year that it would seek to raise between €6 billion and €10 billion this year to help fund the State. Its existing cash buffer of about €20 billion will provide funding until the first quarter of 2015, but the debt management agency is keen to return to regular bond auctions this year.

The NTMA raised €7.5 billion last year and this comprised €2.5 billion in January by way of a bond that will mature in 2017 and €5 billion via a 10-year issue in March that will mature in 2023. These were priced at 3.316 per cent and 4.15 per cent respectively.

'Sustainable basis'
Last month agency chief executive John Corrigan said the challenge for Ireland was to achieve a "regular return to the markets on a sustainable basis".

“We need to get into a pattern that shows we have regular access [to the markets]. That’s the key,” he added.

Ireland was priced out of markets in 2010 due to concerns over the economy and banking sector. This necessitated the €67.5 billion bailout.

Meanwhile, signs of a rebound in the services sector of the economy were in evidence, with the latest Purchasing Managers’ Index of activity in the sector advancing for the 17th straight month. The index hit 61.8 in December, the highest level since February 2007, up from 57.1 in November.

The gauge is compiled by Investec and covers businesses from banks to hotels. The December index showed particularly strong growth in employment and it rose for the 16th month in a row in December.

Positive indicators
Investec Ireland chief economist Philip O'Sullivan

said the data shows that there is “much to be optimistic about”.

The survey also shows that, for a fifth successive month, all sub-segments – business services, financial services, technology, media and telecoms and travel & leisure – reported growth in new business.

Globally, service industry growth picked up across most of Europe as 2013 closed.