State borrows on the market at record low cost
Published 09/09/2016 | 02:30
The State has borrowed €1bn for 10 years at an effective interest rate of just a third of one percent - a record low.
The National Treasury Management Agency (NTMA) issued the bond yesterday morning on behalf of the Government.
Lenders offered €2.452bn at the debt auction, helping drive down borrowing costs. The bond was sold at an annualised yield of 0.33pc - an extraordinarily low cost for long term debt.
The NTMA has raised €6.5bn of long term debt so far this year. It means the lower end of its full year target to raise between €6bn and €10bn has been passed.
The bond deal was the first since May where the NTMA raised €750m of debt due to be repaid in 2022 at a yield of 0.157pc.
Meanwhile, Nama now expects that its cash balances by the end of this year will almost cover its remaining senior debt maturities, according to a spokesman for the agency.
NAMA has paid back 85pc of its €30.2bn of senior bonds. Once it pays off remaining senior bonds - mainly owned to the Irish banks, and a further €1.6bn of subordinated debt, any further cash raised will be returned to the State.
In June Nama raised its lifetime profit forecast to €2.3bn
Yesterday, analysts at Davy Stockbrokers said they now believe a further profit upgrade is highly likely.