NTMA bond auction success

THE National Treasury Management Agency’s (NTMA) decision to press ahead with another bond auction, despite concern over the rising cost of borrowing, proved justified — with the markets reacting positively to another successful fundraising round.

On a solid day’s trading on the ISEQ, the two main Irish banking stocks regained lost ground; AIB up by 5.6% at 85c and Bank of Ireland up by 5.45% at 81c.

Although the NTMA had already met 90% of its borrowing target for 2010 and secured funding up to the second quarter of next year, the profile of the latest auction rose on the back of a marked increase in borrowing costs.

The result of yesterday’s success is 99% of Ireland’s borrowing requirements for this year are catered for.

They will be funded up to the second quarter of 2011 — a year where €25bn will be required in full.

Meanwhile, speaking in Beijing on the latest stop of his Asian lecture tour, Central Bank Governor Patrick Honohan opined it remains a possibility that Ireland’s budget deficit could be cut back to 3% of GDP by 2014 — the European target — “if economic growth is consistent with the Government’s projections”.

The NTMA’s Anthony Linehan also said the National Asset Management Agency (NAMA) could be on course to break even.

It could even make a profit, he said.