Thursday 27 June 2019

NTMA issued €1bn on the bond market ahead of ECB meeting

NTMA borrowed €1bn worth of bonds this morning
NTMA borrowed €1bn worth of bonds this morning

Gretchen Friemann

The State debt agency issued €1bn worth of bonds this morning as investors continued to display strong support for Irish sovereign debt ahead of today’s governing council meeting at the European Central Bank.

The ECB’s ultra loose monetary policy has helped drive borrowing costs to unprecedented lows.

Despite market uncertainty about the future of the ECB’s massive bond-buying scheme, known as quantitive easing, investors piled into the latest bond issuance from the NTMA.

The state agency sold €500m worth of bonds, which mature in 2022, at a rate of 0.109pc. While this means investors are little payment for holding Irish government debt, the same dated paper attracted a slight negative rate in October, meaning that back then, investors paid to hold sovereign debt.

A second longer dated €500m bond, issued this morning, attracted a rate of 1.07pc rate. The paper matures in 2028.

This latest bond auction comes as markets remain skittish over the threat of a trade war between Europe and the US, even though President Donald Trump appears to have softened his stance overnight on proposed tarriffs on aluminum and steel imports.

The NTMA received 1.35bn bids on the 2022 paper, generating a cover ratio of 2.71, and 1.2bn bids on the 2028 paper, delivering a cover ratio of 2.49.

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