NTMA completes buyback, swap on 2016 bond

Wednesday 02 July 2014 17.03
NTMA cancelled more than €2 billion worth of debt due to mature in 2016 after today's measure
NTMA cancelled more than €2 billion worth of debt due to mature in 2016 after today's measure

The National Treasury Management Agency has cut its funding requirements for 2016 by €2bn through a bond swap and buyback today.

This is the latest move by the debt agency to even out the country's debt repayment schedule.

Ireland is fully funded for 2014 and, ahead of a bond auction next week, has already raised over 70% of the €8bn needed to fully pre-fund itself for 2015. 

Today's switch and buyback by the NTMA cuts the €10.2bn of Irish bonds due to be redeemed in 2016 to €8.1bn. It must then repay €7bn of debt falling due in 2017. 

In each of those years, Ireland also has to pay back €3bn borrowed from the IMF and through bilateral loans from Britain, Sweden and Denmark. 

"It is a satisfactory result for the NTMA," said Ryan McGrath, a Dublin-based bond dealer with Cantor Fitzgerald. 

He said some of the largest holders of the 2016 bonds, including the European Central Bank and money market funds, appeared not to have participated. 

The National Treasury Management Agency said it had bought back €1.077bn worth of the 2016 bond and bought another €959m of the bond as part of the switch.

Ireland, which was granted an extension to the maturity of the EU loans that made up more than half of its €67.5bn of external support, has just €5bn of Government bonds to redeem in 2023 and €4bn in 2024. 

Ireland began reducing its once hefty post-bailout funding requirements with a bond switch in January 2012 that marked its return to the debt markets, following up with a second switch later that year. 

Other peripheral euro zone countries have also used bond switches to trim future funding needs, most recently Spain, which last month swapped expensive debt issued at the height of the euro zone crisis for a new 10-year bond. 

Portugal yesterday opened books on a 10-year dollar bond, its first in four years as the country raises financing for 2015 after leaving its international bailout in May.

The NTMA said yesterday that it would hold a bond auction next week. The auction, which will be held on Thursday, will be the only one held between now and the end of September. It also plans to hold a treasury bill auction on September 18.