Ireland has further availed of low borrowing costs to meet its funding needs by raising an extra €6bn amid record investor demand for Irish debt.
The National Treasury Management Agency – NTMA – ended up raising €2bn more than expected via its latest bond sale. The €6bn of ten-year debt was raised at an interest rate of just over 0.28%.
The latest sale was notable for hitting a record level of demand for Irish debt, with total orders worth €66bn received from around 400 investors. To put that into context, the previous high water mark for orders, received by the NTMA, was €33bn earlier this year.
Earlier this week the agency said it had scrapped plans for a regular bond auction on Thursday in favour of an earlier debt sale through a syndicate of bank sellers. Syndicated sales typically raise higher amounts of funds and are being used regularly at the moment as countries look to rapidly shore up reserves amid the economic shock brought about by the Covid-19 pandemic.
The NTMA has now raised €18.5bn from bond sales this year, keeping it well on track to meet its €20bn-€24bn funding range. The agency upped its funding targets in April as the Covid crisis took hold, from a previous range of €10bn-€14bn.
“The continued strong demand among investors for Irish sovereign debt created an opportunity for us this week to execute our third syndicated transaction of 2020,” said Frank O’Connor, the NTMA’s director of funding and debt management.
Mr O’Connor said Ireland’s funding position gives the NTMA “significant flexibility” and leaves it “in a healthy position” to meet its remaining requirements over the course of the second half of this year.
“Our borrowing programme is benefiting from a range of supporting factors: improvements in our sovereign credit ratings, our smoother and longer debt maturity profile and the accommodative stance of the ECB,” he said.
Investor demand was also strong for Spain, which raised €12bn via 20-year bonds on the back of €78bn of demand. Greece meanwhile was set to raise €3bn via 10-year bonds, with investor demand of over €16bn.
Davy sees purchases of Irish debt by the ECB - on the back of its expanded bond purchasing programme - growing from €3bn to €10bn by the end of this year and to €17bn by the end of 2021.