Thursday 23 November 2017

NTMA open to more 100-year note sales amid strong reaction

The National Treasury Management Agency (NTMA) remains open to more bond sales akin to the 100-year note issued during the week. Photo: Reuters
The National Treasury Management Agency (NTMA) remains open to more bond sales akin to the 100-year note issued during the week. Photo: Reuters
Gavin McLoughlin

Gavin McLoughlin

The National Treasury Management Agency (NTMA) remains open to more bond sales akin to the 100-year note issued during the week.

The NTMA, which is responsible for borrowing on behalf of the exchequer, told this newspaper that it had received a strong positive reaction from market participants on the back of Wednesday's transaction.

It borrowed €100m through issuing Ireland's first-ever 100-year note with an interest rate of just 2.35pc. This is seen as very cheap for a transaction dating over such a long period, where so many things could happen that would negatively impact Ireland's creditworthiness.

NTMA director of funding and debt management Frank O'Connor said the "ultra-long maturity is a significant first for Ireland and represents a big vote of confidence in Ireland as a sovereign issuer".

The deal, which is unusual in a eurozone context, came about as a result of a reverse inquiry - meaning that the investor approached the NTMA looking to lend the money, rather than the NTMA going to market looking to borrow the money. Mexico has recently borrowed money via 100-year bonds.

The Irish note was sold by private placement through Goldman Sachs International Bank and Nomura.

"We have received significant positive feedback from market participants following the transaction announced on Wednesday," the NTMA said in a statement to the Sunday Independent.

It added that is would examine other opportunities for further transactions that are out of the norm.

"While private placements tend to be infrequent and limited in size, they do complement our core bond funding executed through syndications and auctions.

"In this regard, we remain open to explore further opportunities that may arise but not at the expense of maintaining market liquidity through continued issuance of benchmark bonds," it said.

The NTMA's core funding strategy plans were announced on Friday.

There will be a bond auction on April 14 and May 12, with further details to be announced on the Monday prior to each of those, followed by a Treasury Bill auction on June 16.

Sunday Indo Business

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