State taps the market for €4bn on back of strong demand

The National Treasury Management Agency (NTMA) raised €4bn from bond investors yesterday after encountering heavy demand for its latest syndicated bond issuance.

The deal size was at the top end of a €3bn-€4bn range, and issued with an annual yield for investors of 1.3pc.

This latest deal takes the NTMA’s bond issuance to €10.25bn so far this year out of a planned total of between €14bn and €18bn in 2018. With a balanced budget anticipated, the bulk of new debt is being raised to refinance obligations as they fall due including €8.9bn set to mature in October.

Yesterday’s syndication saw €12.5bn of orders placed, which included €2.35bn of interest from the joint lead managers – banks that managed the debt placing.

Barclays, Cantor Fitzgerald Ireland, Goldman Sachs, HSBC, NatWest Markets and SG BIC were mandated as joint lead managers to the syndicated bond auction.

The NTMA has opted to borrow far more than last year, with the issuance target increased from €9bn to €13bn in 2017 to between €14bn and €18bn in 2018 – partly driven by the Government’s debt-refinancing schedule.

But market sources say the NTMA is also spurred on by the looming conclusion to quantitative easing, the cheap ECB money that has driven borrowing costs to record lows.