NTMA completes over half of full-year funding target with €3.5bn bond sale

Debt agency increased offering after receiving €35bn in offers from over 200 investors

The National Treasury Management Agency (NTMA) raised €3.5 billion on Thursday from international debt investors, meaning it has achieved more than half of its full-year funding target as the Government counts the cost of the Covid-19 pandemic.

The State’s debt management agency had originally set out to raise between €2 billion and €3 billion from the sale of 20-year bonds, but raised its goal after receiving total orders of more than €35 billion from more than 200 investors.

The notes, which were marketed by Barclays, BNP Paribas, Cantor Fitzgerald Ireland, Danske Bank, JP Morgan and Nomura for the NTMA, were priced to carry a coupon, or interest rate, of 0.585 per cent.

The agency has now raised €10.5 billion by selling long-term bonds so far this year, with its full-year goal set between €16 billion and €20 billion.

“Today’s transaction underlines the continued strong demand from a broad investor base for Irish sovereign debt and means that, four months into 2021, we have raised close to 60 per cent of the mid-point of our target funding range,” said Frank O’Connor, NTMA director of funding and debt management.

“Today’s 20-year transaction reaffirms our approach to issue longer dated bonds when demand allows it. The low interest rate environment over recent years has created opportunities to lock in the benefits of low rates for the longer term and gives us greater certainty over future debt servicing costs”.

Deal without Davy

This is the first syndicated bond deal through banks and securities firms that the NTMA has carried out since it withdrew its authorisation for Davy to act as a primary Irish Government bond dealer last month as the firm was caught up in a bond-trade scandal.

The Government said on Wednesday in an updated set of economic forecasts that it expects to record a €18.1 billion general deficit this year, equating to 4.7 per cent of gross domestic product (GDP), as it continues with Covid-19 related spending programmes, including the pandemic unemployment payment and wage subsidy schemes.

Last year, a general government deficit of €18.4 billion, or 5 per cent of GDP, was reported.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times