NTMA beaten to punch on bond issuance for first time in five years

Slovenia raises €1.5 billion, Ireland likely to go to market before Westminster Brexit vote

NTMA chief executive Conor O’Kelly. Having raised €17.25 billion last year, the NTMA ended up with about €13 billion of cash at the end of 2018. Photograph: Sara Freund

NTMA chief executive Conor O’Kelly. Having raised €17.25 billion last year, the NTMA ended up with about €13 billion of cash at the end of 2018. Photograph: Sara Freund

 

For the past five years, the National Treasury Management Agency (NTMA) has been quickest out of the block to ensure that Ireland was the first euro-zone government to launch a multibillion-euro bond sale in early January.

Not this year, however. Slovenia ventured out on Monday to raise €1.5 billion through the sale of long-term bonds – making it the first euro-zone state to test financial markets since the European Central Bank (ECB) ended its €2.6 trillion quantitative-easing stimulus programme at the end of December.

And just before lunchtime, Belgium announced that it had hired a group of banks to sell 10-year notes, with the deal likely set to conclude on Tuesday.

As bond market types consider Belgium to be a “semi-core” issuer, like Ireland, it’s likely that the NTMA decided to hold off and not compete with a peer at the same time.

But the agency will be loath to hold off too long and be hit by inevitable Brexit jitters ahead of UK prime minister Theresa May bringing her European Union withdrawal agreement to parliament for a vote next week.

As things stand, the market interest rate – or yield – on Ireland’s 10-year bonds has crept up to 94.9 per cent from 89.8 per cent at the end of December amid Brexit nervousness. The difference between German and Irish yields has also widened to more than 0.73 percentage points, a level last seen in April 2017.

Having raised €17.25 billion last year, the NTMA ended up with about €13 billion of cash at the end of 2018 – which will go much of the way towards financing the redemption of €15 billion of bonds that fall due this year.

It has set its sights on selling between €14 billion and €18 billion of bonds in 2019 to help pre-fund more future liabilities.

Meanwhile, a raft of other countries are waiting in the wings with bond-auction plans, including Germany, France, Italy and the Netherlands.

Expect the NTMA to pull the trigger on a €3 billion-€4 billion bond sale immediately after the Belgian deal goes through.

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