Monday 19 March 2018

Irish debt still in demand with latest €1bn auction

NTMA's Treasury Building
NTMA's Treasury Building

Gretchen Friemann

The rebound in demand for Irish sovereign debt shows little sign of dwindling following yesterday's €1bn auction by the National Treasury Management Agency.

In a further indication that Ireland's economy has regained a normalised footing after its crippling banking crisis, investors piled into the sale pushing yields below comparable issuances earlier this year.

While the continuation of the ECB's ultra loose monetary policy remains a key factor, Davy's Barry Nangle pointed out that Ireland is now viewed as a core European economy given the yields are "marginally higher" than the ECB base rate.

A €700m bond maturing in 2026 attracted a yield of .72pc, compared to last month when the NTMA issued the same dated paper for a yield of .94pc.

In total 1,573m bids were submitted for the note, producing a bid to cover ratio of 2.25. A second €300m bond maturing in 2045 garnered a yield of 1.9pc.

The auction takes the Government within its €9bn-€13bn target range for the year, cementing expectations the total borrowings will either hit or exceed the maximum threshold.

If last month's inaugural inflation linked note, which raised €609.5, is factored in, the NTMA has borrowed a total of €9.3bn.

Frank O'Connor, the agency's director of funding and debt management signalled in a recent interview the target range was flexible, comments that were interpreted by some in the market as a sign the NTMA intends to raise more than €13bn.

Others have insisted it merely provides greater flexibility.

European investors snapped up the majority of this latest issuance although over the past year Asian institutions have become regular investors.

Irish Independent

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