National Treasury Management Agency sells €3bn bond

The National Treasury Management Agency yesterday completed a large chunk of its whole year’s debt sales target by selling €3bn in a 10-year bond, at a yield of 1.156%.

Late last month, the country’s debt management agency set a funding target for 2016 of between €6bn to €10bn.

It is traditionally one of the first debt offices out of the blocks in the new year, and it said yesterday that global bond markets were favourable in January.

The sell-off in global equities of the past few days about China economic growth and its stock markets have helped firm bond markets as investors sought safety in bonds.

The ECB’s bond-buying programme has significantly helped yields of eurozone bond markets fall significantly in the past year.

Given the volatility and uncertainty over the last few days, the issue was “priced to go”, said David Lynch, sales trader at IG in Dublin.

Analysts say the cost of funding for the Irish Government remains at historically low levels.

The Irish benchmark climbed as high as 14% during the height of the European debt crisis, when it appeared that the eurozone was on the verge of a break up.

Analysts say that funding pressure on the Government remains very light for 2016 and 2017.

The exchequer is taking in an unexpected bounty, particularly from corporate tax receipts, and the funding of the exchequer’s balance is low.

The NTMA, however, faces a bond redemption of €8bn in April.

In later years, the funding environment is set to become more challenging, with large government bond redemptions in 2019 of €14.5bn and in 2020 of €20.9bn to be refinanced.

However, the NTMA needs to preserve a presence to keep liquidity in the Irish bond markets.

That message was repeated yesterday.

Frank O’Connor, the NTMA’s director of funding and debt management, said that “in essence, it was a good day”.

The agency will outline its regular plans for the first quarter on Monday.

Despite strong demand, the NTMA “wasn’t tempted” to budge from its €3bn issue target yesterday, he said.

The NTMA said that overseas investors bought the bulk of the €3bn bond.

By type of investors, fund managers, banks, pension funds and insurance companies, and central banks were among the buyers of the bond.


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