NTMA raises €1 billion in bond auction

Thursday 10 April 2014 16.45
NTMA raises another €1 billion in bond auction
NTMA raises another €1 billion in bond auction

The National Treasury Management Agency has completed an auction of €1 billion of benchmark 10-year Irish Government Bonds.

The bonds, which mature in 2024, were sold with an interest rate paid to investors of 2.917%.

The NTMA has raised €5.75 billion in the bond markets so far this year which is more than 70% of its funding target of €8 billion for the full year.

Today’s auction received 2.8 times more bids than was needed to complete the auction.

The NTMA returned to regular bond auctions on March 13, following a three and a half year hiatus from bond auctions while it was under the protection of the EU/IMF bailout.

Ireland sold €1 billion of the bonds in its first such tender  which will pay the investors a yield of 2.9%, the lowest on record for a 10 year auction.

Minister Noonan said the sale "highlights the progress that has been made in fully restoring market access".

Alan McQuaid, economist with Merrion Capital Group, said: "With another €1 billion tap of its benchmark March 2024 bond and a lower yield than the previous auction, the sale is very positive. We’re now in a very comfortable position, and this will help keep Irish bond yields lower relative to other peripherals".

The NTMA has been raising debt periodically for over two years through debt swaps and syndicated issues, a strategy that has been copied by Portugal which hopes to follow Ireland out of its bailout next month.

Twice bailed-out Greece issued its first sovereign bond in almost four years today having attracted more than €11 billion of investor interest.

The NTMA plans to continue its funding programme with another bond auction on May 8.

Italy's borrowing cost at record low on 12-month bonds

Italy raised €7.5 billion today in a sale of 12-month bonds with the rate falling to a record low of 0.589%, the Bank of Italy said.

The rate at a similar auction on March 12 was 0.592%, the central bank said in a statement.

Demand was 1.36 times higher than the offer and the amount sold was the maximum planned, it added.

Italy's borrowing costs have fallen drastically in recent months amid increased investor confidence, allowing Prime Minister Matteo Renzi's new government to save money on interest payments from the budget.