NTMA to raise up to €18bn next year as ECB ends QE

The State’s debt office said on Thursday it plans to raise between €14 billion and €18 billion next year in the long-term debt markets, after the European Central Bank’s (ECB) formally ends its €2.6 trillion bond-buying programme that has suppressed borrowing rates in recent years.

"We expect to start 2019 with strong cash balances in excess of €13 billion and we are well placed to fund maturities totalling €15 billion that will arise during the year," said Frank O'Connor, director of funding and debt management at the National Treasury Management Agency (NTMA).

The Government also faces an interest bill of €5.32 billion on its borrowings, according to figures contained in the latest budget, outlined in October.

“Our expected funding of €14-€18 billion in 2019 continues our strategy of prefunding to meet future redemptions, with 2020 marking the last year in which sizeable payments are falling due,” Mr O’Connor said.

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Ireland is typically among the first European sovereigns to go out into the market in early January with a multi-billion-euro bond sale and traders expect that it will stick to that pattern next year. The yield on the country's benchmark 10-year bonds currently stands at 0.94 per cent, down from a high of 14.1 per cent in July 2011 at the height of the State's financial crisis.

The decline in the yield is largely down to unconventional measures taken by ECB president Mario Draghi, including the bond-buying programme, known as quantitative easing (QE), which was launched in early 2015 in an effort to reboot inflation and the euro-zone economy.

The ECB confirmed on Thursday that the programme will come to an end at the close of this month, but said that it will continue to reinvest cash from maturing bonds in its portfolio for an extended period of time. This should help keep down market interest rates - or yields - on bonds for the near term.

The NTMA sold €17.3 billion of bonds in 2018, reaching the upper end of its full-year target of between €14 billion and €18 billion.