Wednesday 13 December 2017

State to raise €1bn in bond auction on Thursday

Moody's is set to upgrade Ireland's rating. Photot: Emmanuel Dunand/AFP/GettyImages
Moody's is set to upgrade Ireland's rating. Photot: Emmanuel Dunand/AFP/GettyImages
Donal O'Donovan

Donal O'Donovan

The Government will look to borrow €1bn on the financial markets due to be repaid in 2030 at a regular bond auction to be held on Thursday.

Once the deal completes the National Treasury Management Agency (NTMA) will have raised €12bn of its target to raise €12bn to €15bn this year on the markets.

Yields, or borrowing costs, were unchanged yesterday at 1.365pc a year to borrow for 10 years after the deal was announced.

Borrowing costs have risen sharply for the State in the past six months, in tandem with the cost to other European debtors, but remain well below historic norms.

The planned 20-year bond deal is part of a trend to lock in low debt cost by borrowing for increasingly long terms.

This week's bond deal is the fifth "tap" auction in 2015, including two earlier add-ons to the amount of debt falling due in 2030.

Investor interest may be heightened this time around because Moody's is tipped to upgrade Ireland's rating to an "A3" on Friday, when the international rating agency is due to provide an update to the market regarding its views on the Irish economy.

If it happens, the upgrade will mean Ireland has a sought-after 'A' rating from all three of the main rating agencies for the first time since the crash.

That would widen the pool of investors potentially able to buy Irish government bonds and so, in theory, help reduce borrowing costs.

Moodys is due to publish its update after US markets have shut late on Friday.

According to Ryan McGrath of Cantor Fitzgerald, there are likely to be two further Irish sovereign bond "tap" deals later in the year.

Irish Independent

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