NTMA to raise up to €2bn through 30-year bond

The NTMA will raise up to €2bn through a 30-year bond that could be issued as early as today. It will be the first 30-year bond in the history of the State.

The NTMA is looking to exploit very favourable credit market conditions. Irish bond yields have tumbled to record lows over the past few months on the back of a supportive external environment and renewed growth in the domestic economy.

The NTMA announced that it has mandated Barclays, Citigroup, Credit Agricole, Danske Bank, Davy Stockbrokers, and the Royal Bank of Scotland as joint lead managers “for a forthcoming 30-year Euro Reg S benchmark transaction, maturing 18 February 2045”.

Ireland’s sovereign bond yields have been on a steady downward path since the country exited the bailout programme in December 2013. Yields on 10-year bonds soared as high at 15% in 2011 as the economy buckled under the strain of an imploding financial system and collapse on the property market.

However, a robust economic recovery took hold in 2013. Ireland was the fastest growing economy among the 28-member EU in 2014 and is expected to post the highest growth rate again in 2015.

Ireland is now investment grade with all three of the main credit ratings agencies. It is rated Baa1 with a stable outlook by Moody’s; A with a stable outlook by Standard & Poor’s; and A-minus with a stable outlook by Fitch.

Aggressive ECB action over the past three years has also helped reduce bond yields throughout the region. Last month, the bank’s president Mario Draghi announced a €1.1 trillion bond buying programme. The eurozone is currently experiencing a bout of deflation. If a sustained period of falling prices was to set in, then it could tip into a debt deflationary spiral with potentially devastating consequences.

From March 1, the ECB will buy up to €60bn of sovereign and corporate debt each month until September 2016 in an effort to return the inflation rate close to the 2% target. So far, the election of Syriza in Greece, with a pledge to renegotiate the bailout programme, has not had any impact on the wider bond market.