Irish bond issue secures target of €1.5bn

IRELAND raised €1.5 billion in a bond issue yesterday — the maximum amount it set out to raise — despite weak demand.

Last week the National Treasury Management Agency (NTMA) said it planned to raise between €1bn and €1.5bn in new bond issues. In a statement yesterday, the agency said it decided to issue a total of €1.5bn, as the total bids for the bond was more than €3.7bn, or 2.5 times the maximum amount on offer in the auction.

An amount of €600 million of the 4% Treasury Bond 2014 was issued where the total bids received were 2.8 times greater than the allocation. The NTMA sold €900m of the 4.5% Treasury Bond 2020.

Alan McQuaid, chief economist Bloxham Stockbrokers, speaking ahead of yesterday’s bond issue said the way Ireland has gone about cutting its deficit through tough budgetary measures has won support internationally.

When one takes account of the surplus €5bn from last year, the agency has already got more than half the projected target funds it needs for 2010, a situation which will be the envy of most Eurozone countries, he said.

“As such, we think Irish bonds will fare a lot better than many of their Euroland counterparts this year,” he added.

Overall the NTMA plans to raise up to €20bn in the bond markets and the requirement is significantly less than in 2009 because of a smaller projected exchequer deficit of €18.7bn and a lower refinancing requirement of €1.2bn.

David Schnautz, a bond analyst at Commerzbank in Frankfurt, thought demand was on “the weak side” but added buying Irish debt was still less risky than any of the other weaker euro economies now under market scrutiny, such as Greece and Portugal. “We still favour Irish bonds in peripheral space from a value perspective, especially as Ireland is on the right track to fix its problems,” he said.