Aggressive fundraising reduces borrowing State must refinance

NTMA actively lengthens maturity of Irish debt to EU-record average of 11 years

NTMA chief executive Conor O’Kelly:  “Nobody has a crystal ball on interest rates.”

NTMA chief executive Conor O’Kelly: “Nobody has a crystal ball on interest rates.”


Ireland’s aggressive fundraising on the markets and the build-up of cash balances has reduced the amount of borrowing which the National Treasury Management Agency has to refinance over the next three years to €40 billion, from €70 billion previously, according to the agency’s chief executive, Conor O’Kelly.

The NTMA has actively lengthened the maturity of Irish debt, he told a conference in Dublin. The debt now has an average maturity of 11 years, the longest in Europe.

“Nobody has a crystal ball on interest rates,” Mr O’Kelly told the AAA Issuer and Investor Summit in Dublin. However, the NTMA has “essentially taken out insurance against rising rates into the future”.

The NTMA had actively lengthened the maturing period on its debts, he said, and had pre-funded and built up significant cash balances in advance of the dates on which bonds fell due for repayments, he said.

Longer- term debt

The NTMA had also exchanged €2.5 billion in shorter-term bonds for longer- term paper, he said. It has also accelerated the buyback from the Central Bank of bonds taken on following the liquidation of Irish Bank Resolution Corporation.

This tactic has proved controversial, as it involves debt repayments leaving the State, but O’Kelly said that it “is effectively the NTMA taking out insurance against rates rising into the future.”

In total the NTMA actions had reduced the amount of debt which has to be refinanced in the next three years from €70 billion to €40 billion, according to Mr O’Kelly.

This total counts in the significant cash balances held by the NTMA, currently in excess of €10 billion. In addition, the NTMA needs to raise further funds to pay for any borrowing requirement by the exchequer.

Ireland has benefited in recent years from “major external tailwinds”, according to Mr O’Kelly, including falling oil prices, favourable currency movements and the European Central Bank’s programme of bond purchases which has supported all euro-zone government bond markets, including Ireland’s. However, there may be “significant headwinds” coming, he warned, from Brexit, changes in US policy and possible political instability in Europe.