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NTMA steps back from bond markets as budget surplus promised

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NTMA chief executive Frank O’Connor speaks at a recent investor presentation

NTMA chief executive Frank O’Connor speaks at a recent investor presentation

NTMA chief executive Frank O’Connor speaks at a recent investor presentation

Ireland won’t be borrowing from the bond markets until next year as an unexpected budget surplus has eliminated the need for the National Treasury Management Agency (NTMA) to issue more debt.

The NTMA confirmed Wednesday that it will hold no auctions of bonds or Treasury bills for the remainder of 2022 due to its large cash reserves and the Government’s strong budgetary position going into 2023.

The move ends this year’s funding programme after issuing €7bn in long-term bonds through September, far less than the €10bn-€14bn projected funding requirement announced last December.

“This decision reflects our strong funding position, as we prepare to enter 2023 with cash balances of €20bn,” said NTMA chief executive Frank O’Connor.

“The Exchequer position has been strengthened further by yesterday’s Budget 2023 announcement showing a surplus for this year versus the forecast deficit of €7.7bn in Budget 2022.”

The NTMA said it will resume long-term borrowing activity in early 2023 after announcing its 2023 bond funding range in December.

Mr O’Connor said the agency retains “significant flexibility” in meeting future borrowing requirements.

Ireland was last in the bond markets on the first of the month when the NTMA sold €1.25bn in fresh funding ahead of the European Central Bank’s most recent interest rate increase.

That auction followed cancelled sales in June and August due to Ireland’s strong fiscal position as post-pandemic tax revenue poured into the Exchequer.

The strong performance in tax receipts and lower than expected spending on Covid-19 and other contingencies slashed Government borrowing needs from €7.7bn to just €1.1bn, making it safe to use some of the cash built up during a decade of low interest rates.

This prompted the NTMA in August to start spending down a €6.3bn chunk of its cash balance rather than relying on further market funding.

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