NTMA bond hopes to raise €5bn

The NTMA is set to launch a 10-year bond today that could raise up to €5bn.

NTMA chief exec John Corrigan

The issue is the first since the country exited the EU/IMF bailout programme in December.

“It is good to see the Government making a statement of intent so early in the year,” said Investec chief economist, Philip O’Sullivan.

Market sources suggest the NTMA will look to raise €3bn from the 10-year bond. But Mr O’Sullivan believes that the agency could take advantage of what is likely to be strong demand and take up to €5bn. He estimates the yield will come in at between 3.6% and 3.65%.

The NTMA’s chief executive, John Corrigan, said before Christmas that the agency would look to raise a total of roughly €7.5bn this year. If it was to raise €5bn of that today, then it would take a huge amount of pressure off the agency for the remainder of the year.

There had been speculation that the Government would wait until the credit ratings agency, Moody’s, publishes its next review of the economy on Jan 17.

Moody’s is the only one of the three main credit ratings agencies to have Ireland placed on junk status.

However, Mr O’Sullivan believes it is unlikely Moody’s will upgrade the country’s credit rating during this review. “The rating is more reflective of events at a eurozone level than anything else.”

Moody’s is the most bearish of the ratings agencies on the prospects for the eurozone. Since the credit crisis erupted in 2008, which presaged the initial wave of downgrades across the region, Moody’s has so far not upgraded any member of the single currency.

An upgrade would have the potential to push down further yields on Irish debt.

There has been a big shift in the holders of Irish bonds over the past few years. Over 2010 and 2011, it was mostly hedge funds who speculated on Irish bonds. Now long term investors, such as pension funds, are buying up Irish bonds.

Mr Corrigan has said he is aiming to return bond issues to pre-turmoil patterns. Up to 2009, the NTMA released a calendar every January with a schedule of bond issuances for the year.

The Government is already sitting on a cashpile of €21bn, which means that the economy is pre-funded into 2015.

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