State seals €1.25bn in latest bond auction

IRELAND has borrowed €1.25bn from the bond markets in a fresh auction by the National Treasury Management Agency (NTMA).

The NTMA issued €950m of bonds maturing in 2028 at a yield of just under 0.82pc.

It issued €300m of bonds maturing in 2045 at a yield of just under 1.64pc. The deal means the NTMA has issued €12.5bn of bonds this year.

The debt management agency has taken advantage of the low interest rate environment to reduce Ireland’s annual interest bill.

But the environment is likely to be more tricky going forward with the European Central Bank (ECB) set to wind down its massive bond-buying programme by the end of the year.

Earlier this week NTMA CEO Conor O’Kelly said this “is likely to have a fairly significant effect both on liquidity and pricing”.

He also warned about Ireland’s dependency on foreign borrowers to meet its funding needs.

“Ninety per cent of our borrowing essentially comes from international investors which makes us extraordinarily dependent on international funding for our debt,” Mr O’Kelly said.

“Many other countries have much stronger domestic savings markets and that changes the attitude that investors have towards a country. The more reliant you are on international markets the more volatile you can expect things to be.”

He also issued a stark warning about the country’s indebtedness, saying the remaining bank stakes should be sold down sooner rather than later.

“We have to recognise just how vulnerable we are in the medium- to long-term while our debt is still as elevated [as it is].”