NTMA raises €4bn at record low interest rate
Among the first eurozone countries to mandate banks to kick off their funding for the year, the NTMA sold the debt via syndication at a yield of 0.87%.
It was aiming to raise between €3bn-€4bn. Investors bid for around €5.75bn, according to one lead banker.
That compared to demand of more than €14bn a year ago when Ireland sold €3.75bn of 10-year debt at 3.5%.
Finance Minister Michael Noonan welcomed the successful sale by the NTMA.
“The success of today’s syndicated bond sale by the NTMA has surpassed all expectations with €4bn raised and the yield dropping well below 1% for a seven year bond for the first time.
“This represents a very good start to 2015 by the NTMA and the low rates bode very well for future issuances throughout the year. The funds that will be raised throughout the year will be used to meet our regular funding requirements but also to complete the refinancing of IMF loans.
“In 2014, the NTMA refinanced €9bn in IMF loans and in 2015, will refinance the remaining €9bn with much cheaper funding.
“It’s a satisfactory result. €4bn was at the upper end of expectations and it’s a record low cost of funding for the taxpayer,” said Ryan McGrath, a bond dealer at Cantor Fitzgerald.
In common with much of the rest of the eurozone, yields on Irish bonds have fallen sharply in the past year, aided by a recovery that is likely to have seen the country’s economy grow faster than any other European Union state in 2014.
The cost of borrowing 10-year debt issued by Dublin on secondary markets was near record lows at 1.25% yesterday, having brushed off news of snap elections in Greece, which hit some other peripheral eurozone states’ bonds.
Fully pre-funded for 2015, the State plans to issue €12bn to €15bn of long-term bonds this year, including at least one syndicated issue.
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