Wednesday 29 March 2017

NTMA to borrow €3bn as early as today

The Government has previously indicated that total borrowing on the markets this year will be in the region of €6bn to €10bn
The Government has previously indicated that total borrowing on the markets this year will be in the region of €6bn to €10bn
Donal O'Donovan

Donal O'Donovan

The National Treasury Managemnet Agency (NTMA) has lined up a group of banks to manage a so called syndicated 10-year bond deal, the first major State borrowing this year. The deal is likely to price as early as today.

Market sources said the deal is set to be for around €3bn - a so called benchmark size. The NTMA said it has mandated Bank of America Merrill Lynch, Barclays, Davy, Morgan Stanley, RBS and Societe General as joint lead managers for the deal. In a syndicated bond structure the leads act as underwriters and to sell on portions of the bond to other investors.

The bond deal had been expected, though there were some fears it could be postponed because of volatility in the global financial markets this week. The Government has previously indicated that total borrowing on the markets this year will be in the region of €6bn to €10bn.

Much of that will be to pay off €8bn of bonds falling due to be repaid in April. Even so the new targets could mean borrowing less than half the €13bn of debt raised last year, thanks to a combination of higher tax income and one off income including from the sale of AIB shares that will be used to pay off debts.

Syndicated bond issuance is less common than the regular bond auctions held by the NTMA but similar deals took place in each of the last three Januaries.

Gross debt as a percentage of GDP is expected to fall to 92.8pc of the size of the economy this year, and to 90.3pc by 2017. In cash terms, however, the debt pile is forecast to rise to €207.1bn.

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