The National Treasury Management Agency (NTMA) yesterday raised €1.02bn through its first issue of amortising bonds, with an average yield of 5.91% and with maturities ranging from 15 to 35 years.
Moreover, the Government has raised a significant portion of the sovereign debt repayments scheduled for January 2014.
Commenting on the bond issues, NTMA chief executive John Corrigan said the transaction, combined with the bond switch and outright sale transaction of Jul 26 and the bond switch transaction of Jan 25, had in effect reduced the original ‘funding cliff’ of €11.9bn (due to the Jan 2014 bond maturity) by 80% to just under €2.4bn.
The NTMA flagged its intention last month to issue amortising bonds in an effort to attract Irish pension funds into Irish sovereign debt. Irish pension funds hold less than 1% of outstanding Government bonds. Amortising bonds are suitable for the pensions industry because they make a combination of principle and interest repayments.
Senior dealer at Danske Markets, Owen Callan, said: “This is a very positive result, slightly higher than expected, with Irish pension fund sector reacting less cautiously than had been envisaged.
Commenting on the successful issue, Finance Minister Michael Noonan said: “The markets are reacting positively to the progress that is being made in restoring order to the public finances, returning the economy to growth, restructuring the banking sector and addressing the legacy debt associated with the recapitalisation of this sector.
Ireland has benefited from an improvement in investor sentiment across the eurozone over the past couple of months.
The Government is currently negotiating with the troika in an effort to get a deal on bank debt.
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