THE latest government bond auction has resulted in the National Treasury Management Agency (NTMA) raising €5 billion – a quarter of Ireland’s borrowing requirements for this year.
The NTMA raised €5 billion through the auction, a syndicated deal involving six banks, attracting orders of over €7bn for the amount available for issue. Up to 80% of the bond has been placed with pension funds, insurance companies, asset managers and banks.
Earlier this month, the NTMA said it would aim to raise €20bn in borrowings in 2010, which would push the national debt up to €95bn from just over €75bn at the end of 2009.
NTMA head John Corrigan said that the latest bond deal reflects the increased confidence of the international investment community in the Irish Government bond market, given that 90% of the latest bond was taken up by overseas investors. Also, the auction puts the NTMA in a comfortable funding position.
“The successful issue of the €5bn bond reflects the ability of Ireland to place long-term debt with stable investors for longer periods and at narrowing spreads over Germany. This issue accounts for 25% of this year’s funding programme of €20bn and leaves the NTMA in a very comfortable position as it commences its series of 11 monthly bond auctions.”
Alan McQuaid, chief economist at Bloxham Stockbrokers, said: “The NTMA has done its bit by raising the funds needed to run Ireland Inc on a day-to-day basis. The onus is now on the Government to do its bit and continue with the correct fiscal austerity measures to tackle the budget deficit. If the Government can do that and send out the right signals in the process, then the NTMA’s job will become easier, and Irish Government bond yield spreads over Germany will narrow further.”
Meanwhile, regarding the planned “national solidarity bond” aimed at small investors, the NTMA is still discussing its make-up with the Department of Finance, but said yesterday more details should come out in next month’s Finance Bill.
This story appeared in the printed version of the Irish Examiner Friday, January 15, 2010
