NTMA to raise cash for IMF loans

The NTMA has said it may raise extra funds — via a syndicated bond issuance — to facilitate the start of an early repayment of Ireland’s IMF loans before the end of the year.

As part of a statement — ostensibly aimed at announcing long and short- term debt auctions for this month and next — the agency said: “Subject to satisfactory progress, with respect to the protocols required to facilitate early repayment of part of Ireland’s IMF programme loans, the NTMA may execute a syndicated bond transaction of benchmark size during the quarter.”

No figure has been mentioned, but it is understood “benchmark size” would equate to around €3bn.

While Finance Minister Michael Noonan last month secured what he called “political agreement” from eurozone finance ministers for an early repayment of IMF loans from bond auction proceeds — covering roughly around €18bn of the €22.5bn loans — he stressed the plan still needs backing from all 27 EU finance ministers; a process which is still ongoing.

Given the loans have a 5% interest rate, it has been estimated that early repayment will save Ireland around €1.5bn.

The Department of Finance is expecting agreement from the wider tranche of finance ministers in the coming weeks, thus allowing for partial repayment to get under way before the end of the year; possibly by the end of next month. The €1.5bn savings estimate, put forward by the Government, is based on illustrative repayments of €15bn to be carried out in three tranches up to the middle of 2016.

The troika recently suggested Ireland’s savings would amount to €2.1bn, but that estimate is based on the loan being repaid in full at once.

Meanwhile, the NTMA said yesterday that it intends — subject to market conditions — to hold another long-term debt-related bond auction this day week, with full details due to be announced next Monday.

The agency is also due to hold a short-term debt, Treasury Bill, auction on November 20, details of which will be published on the preceding Monday.