The National Treasury Management Agency (NTMA) on Thursday raised a further €1.25 billion from an auction of Irish government debt, bringing to €6 billion the total amount the agency has borrowed on behalf of the State this year against the backdrop of rising borrowing costs globally.
In an oversubscribed auction the agency sold €300 million of bonds maturing in 2023 at a market interest rate, or yield, of 2.8 per cent, down slightly from March when it sold 10-year bonds at a yield of 3.37 per cent, the highest rate offered in nine years. Also on Thursday, the NTMA raised €950 million in a sale of longer-term bonds due to mature in 2050 priced at a yield of 3.6 per cent.
The State agency is looking to raise between €7 billion and €11 billion from debt markets this year, a lower target range than recent years due to a number of factors, including a projected budget surplus and reduced borrowing requirements in the aftermath of the pandemic.
The results of Thursday’s auction mean that the agency has raised more than 85 per cent of the lower end of its target range for 2023.
Bets by debt investors on the pace at which the European Central Bank will hike official rates to rein in inflation have seen the market interest rate on the Republic’s existing 10-year bonds rise from 0.25 per cent as of the end of 2021 to 2.8 per cent currently.
Central Bank of Ireland governor Gabriel Makhlouf said on Wednesday that he expects Frankfurt to make two further interest rate hikes in the coming months. and for rates to remain elevated for longer than markets anticipate.