NTMA to raise less in bond sales

The National Treasury Management Agency will raise less in debt sales this year as the budget deficit shrinks and a smaller amount of bonds mature, it said today.

The agency will raise as much as €20 billion in the bond market, down from €35.4 billion in 2009, of which €5 billion was pre-funding to this year.

NTMA chief executive John Corrigan said the lower fund-raising target was due to a smaller projected Exchequer deficit of €18.7 billion compared to €24.6 billion in 2009, and a lower refinancing requirement of €1.2 billion.

He said syndicated bond sales this year will be used to "supplement" the regular bond auctions.

The NTMA's director of funding and debt management Oliver Whelan said the NTMA is considering a 10-year syndication issue.

Ireland's national debt amounted to 65 per cent of GDP at the end of 2009, up from 44 per cent a year earlier.

At 12.30pm, the 10-year Irish bond yield spread over euro zone benchmark German Bunds was steady at 146 basis points compared with mid-morning levels in Europe, but three basis points tighter than at the European settlement close yesterday. The spread has been tightening since marking a peak of 198 bps on December 10th.

The NTMA said it is confident of EU approval for National Asset Management Agency scheme by February, which will mean a slight delay to its launch.

Nama, which will operate under the auspices of the NTMA, expects to buy toxic loans worth €80 billion, between February and the third quarter.

Nama Chief Executive Brendan McDonagh said the European Commission has already asked the Irish financial regulator to oversee the process.

He said the forecast that the assets would be bought at a 30 per cent average discount was still valid. The discount determines how much extra capital lenders such as Allied Irish Banks and Bank of Ireland will need, possibly from the state, which has already pumped €11 billion of capital into the sector.

Additional reporting - Agencies