NTMA bond auction raises €1.5bn

THE National Treasury Management Agency (NTMA) has successfully raised more than half of its total fundraising targets for 2010, after its latest auction of government bonds raised €1.5 billion.

Yesterday’s auction — covering two separate bonds — means that the NTMA (which is in charge of the national debt and Government borrowing) has raised €10.2bn since the beginning of this year, just over half of the €20bn target it set for the year.

This would be in addition to the €5bn, or so, long-term advance funding carried over by the agency from last year.

Analysts welcomed yesterday’s auction as a sign of high demand for Irish bonds and a broad positive for “Ireland Inc” — most believing Irish bonds will fare better than those of many of our eurozone counterparts this year.

“With all the concerns about Greece’s debt problems, Ireland continues to receive praise from its eurozone partners for the decisive steps taken to address its budgetary problems. This perception is not just shared by politicians, but by the market at large. As a result, Irish government paper is now traded as a ‘must have’ within the Euro-land market,” said Alan McQuaid, senior economist with Bloxham Stockbrokers.

“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,” he added.

“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.

“The Government cannot afford to sit back and relax as regards the Irish public finances.

“It needs to tread carefully as regards the current public sector wage talks.

“Any sign that it is taking an easier stance on the pay/pensions bill will likely be met with disapproval by the bond markets and higher yields as a result.”

The NTMA is aiming to raise as much as possible this year to pre-fund some of next year’s funding requirement, expected to reach around €22bn.