Business Irish

Thursday 18 January 2018

NTMA hits 80pc of funding target with latest auction

The National Treasury Management Agency
The National Treasury Management Agency
Donal O'Donovan

Donal O'Donovan

The Government borrowed €750m on the markets yesterday, at the lowest interest rate ever.

The deal is expected to be the last auction before September and traders said there was strong interest from traditionally conservative pension and life insurance funds in the UK and Europe.

The National Treasury Management Agency (NTMA) issued the bonds. The deal means the agency's target of raising €8bn this year has now been 80pc delivered.

The "yield" or effective interest rate on the new bonds due to be repaid in 2024 is 2.73pc – the lowest ever in absolute terms.

The deal was 2.8 times oversubscribed, similar to the demand seen for bond deals earlier in the year.

But, in a big change from two years ago, borrowing costs have been falling across the euro area for all countries, with even Greece able to borrow on the markets.

The extra yield that Ireland must pay compared to Germany to borrow is also falling, a further sign of investor confidence.

The yield on German 10 year bonds was 1.447pc yesterday, compared to Ireland's 2.73pc.

Bond trader Ryan McGrath at Cantor Fitzgerald said he saw selling of relatively lower yielding shorter-dated Irish bonds ahead of yesterday's bond auction – with clients tactically playing the shape of the Irish curve. Investors sold bonds due in 2016 and 2020 to buy bonds to be repaid in 2024 and 2025.

Irish Independent

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