Six firms paid €7.8m in fees for NTMA bond sale

Minister for Finance Michael Noonan has confirmed that six joint lead managers of the National Treasury Management Agency's (NTMA's) recent 10-year €5 billion bond sale are to receive €7.78 million in fees.

In a written Dáil response to Sinn Féin finance spokesman Pearse Doherty TD, Mr Noonan said a total of €8.75 million is to be paid in fees to 17 primary dealers in Government bonds in connection with the sale.

Mr Noonan said that €7.78 million, representing 89 per cent of the €8.75 million, was paid to six of the primary dealers – Barclays, Danske Bank, Davy, Goldman Sachs International, HSBC and Nomura – who acted as joint lead managers and had significant roles in the new 10-year bond sale.

He said the remaining 11 per cent is to be paid to 11 other primary dealers who were co-leads in the syndicate, holding lesser roles.

'Strong order book'
"It is important to emphasise that the team of primary dealers chosen to manage the transaction assisted in building a strong order book, with some 400 investors submitting bids, including fund managers, banks, pension funds and insurance companies," Mr Noonan said.

“The total bids received amounted to some €13 billion. This clearly demonstrates that Ireland has regained access to the international debt markets. The size of the order book and the broad investor interest is a strong signal of confidence in Ireland,” he added.

The NTMA, headed by chief executive John Corrigan, has been issuing bonds with gradually lengthening maturities since July last year, when the first bonds since the bailout were placed with investors.

The recent 10-year bond sale was the NTMA's first new 10-year issuance since January 2010, when €5 billion of the October 2020 bond was issued at a yield of 5.091 per cent.

Primary dealers
On the role of primary dealers, Mr Noonan said: "The NTMA recognises 17 primary dealers in Irish Government bonds, all of which are members of and regulated by the Irish stock exchange.

“Primary dealers have obligations with respect to marketmaking in Irish Government bonds, an essential role in the provision of liquidity to investors.

“Primary dealers have bidding obligations in respect of bond and treasury bill issuance by auction.

“They also advise the NTMA with respect to issuance and assist with the marketing process as well as producing research designed to assist investors.”

'Standard fee'
Mr Noonan added: "The NTMA has advised that the fee payable to the syndicate of banks was 0.175 per cent of the nominal debt issued.

“This is the standard fee for the issue of bonds of a 10-year maturity by syndication in the euro area sovereign bond market and is also, for example, the fee paid by the European Investment Bank, which has a AAA credit rating, for its 10-year bond issuance.

“Based on the €5 billion issued, the total fee was €8.75 million. Of this amount, 89 per cent is split evenly between the six joint-lead managers, with the remaining 11 per cent divided equally between the other 11 co-lead banks. The fee represents an annualised cost of 0.02 per cent over the life of the bond.”