The agency announced yesterday that it had mandated Barclays, Davy, HSBC, JP Morgan, Nomura and Royal Bank of Scotland as joint lead managers for a seven-year bond, maturing March 15, 2022.
The NTMA did not disclose how much it would look to raise, but market sources believe that it will be in the range of €3bn-€4bn.
Moreover, it is thought the agency opted for a seven-year bond to avoid creating lumpy repayment obligations in the future. As it stands, there is a relatively light repayment schedule for 2022.
“We had expected that the agency would come with new issuance in early-2015 given both past form (it has announced bond sales in the first month of each of the past three years) and its intention to redeem another €9.5bn of expensive IMF loans to reduce the costs of servicing the general government debt, clearly, the earlier it does that, the more it will save in interest costs,” said Investec chief economist Philip O’Sullivan.
However, he expected the NTMA to hold off on issuing new bonds until after the credit ratings agency Moody’s published its next review of the Irish sovereign rating on January 16.
“This provides a possible catalyst for pricing to tighten further before launching a new bond. If Moody’s does upgrade Ireland again this month — it raised its rating on the Sovereign by a cumulative three notches during 2014 — this will undoubtedly give a lift to the secondary market performance of the new issue, which will help reinforce the already bullish sentiment ahead of the next sale by the NTMA,” added Mr O’Sullivan.
Irish bond yields were trading at a record low of 1.2% yesterday as Government benefits from a combination of positive developments in the domestic economy combined with market expectations that the ECB will launch a round of quantitative easing in the near future.
The NTMA’s new chief executive, Conor O’Kelly, started last Monday, replacing John Corrigan, who retired in December.