Tuesday 21 November 2017

State 'sale' raises €5bn on markets in under five hours

Donal O'Donovan

Donal O'Donovan

THE Government has raised €5bn in new "10-year" government debt in the first deal of its kind since the EU/IMF bailout.

Borrowing on the markets on such a scale means we have moved dramatically closer to exiting the EU/IMF bailout at the end of this year.

Four-hundred investors offered to lend €12bn to the country in just four-and-a-half hours, after the National Treasury Management Agency (NTMA) opened up a "sale" of the new debt.

"This has been quite extraordinary, and I don't use that word often," Finance Minister Michael Noonan said after the deal closed.

In the end, the Government opted to take €5bn of the cash offered, not the €3bn it was planning to raise.

The interest rate on the new debt is 4.15pc, less than Spain or Italy pays for its borrowings, and they have never been in bailouts.

It will not mean a let-up in the tough round of cuts and taxes hitting families, however, because what the Government takes in through taxation still falls considerably short of what it spends.

The deal is significant in terms of escaping from the bailout.

Successful

"I think we are back in the markets," said John Corrigan, head of the NTMA.

The agency has now secured 75pc of the €10bn it said would be borrowed this year, a figure that might now possibly increase.

It is enough to cover the country's needs until almost the end of 2014.

The deal proved ratings agency Moody's was wrong to have a negative view on Ireland, he said.

"Either the market is wrong or Moody's is wrong," Mr Corrigan said.

But a change of heart by Moody's could be on the cards, the Irish Independent has learnt.

"We have certainly taken note of the successful 10-year issue, which we see as a credit-positive step in Ireland's ongoing efforts to regain market access as the economic adjustment programme nears its close," analyst Kirtsen Lindow of Moody's told this newspaper.

Investors in the new deal were mainly from the UK (25pc), Germany (12pc), the Nordic region (12pc), France (11pc) and the US (7pc).

If Moody's changes its views on Ireland it would be seen as a green light for even more investors to lend.

See business section, page 1

Irish Independent

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