Friday 28 October 2016

State targets €1bn in new debt to take this year's total to €6.5bn

Published 06/09/2016 | 02:30

NTMA's Treasury Building
NTMA's Treasury Building

The Government will look to borrow €1bn on Thursday, resuming debt issuance after a two month summer break.

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The National Treasury Management Agency (NTMA), which manages the State's finances, will look to "tap" or add to existing bonds due to be repaid in 2026, sticking to a now well tested formula, according to analyst Ryan McGrath of Cantor Fitzgerald.

The 2026 bonds carry an interest rate of 1pc but are likely to price at a premium, driving down the real cost to the State as borrower - the yield.

The auction will be conducted on the Bloomberg Auction System and will be confined to recognised Primary Dealers, the NTMA said.

This week's deal will take the total raised by the NTMA this year to €6.5bn - within the target to raise between €6bn and €10bn in 2016.

Canadian rating agency DBRS confirmed on Friday its long term rating for the Republic of Ireland at A (high) and its short-term foreign and local currency issuer ratings at R-1 (middle), all with a Stable Trend.

Confirmation of the ratings reflects Ireland's "strong economic performance and improving public finances", the agency said.

It said the UK vote to exit the European Union poses downside risks, but the Irish economy is benefiting from substantial growth momentum and public debt dynamics that continue to improve.

While Ireland gains from EU membership, an open trading environment, young and educated workforce and flexible labour market, the picture is clouded by high debt levels for the State as well as for households.

In relation to the Apple tax case, DBRS said its not factoring any ramifications from "recent corporate tax-related announcements" but will follow the situation closely.

Irish Independent

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