NTMA raises €4bn from bond sale
Transaction means €10.25bn has been raised from long-term debt sales this year Ireland and France best placed for growth afte upswing ends in euro zone, says UBS
The National Treasury Management Agency (NTMA) has raised €4 billion from the sale of 15-year bonds through a group of banks yesterday.
The State’s debt management agency received a total of €12.5 billion of orders from 190 international investors for the bonds, including €2.35 billion from the syndication of banks working on the deal, the agency said in a statement. The debt was priced to carry a coupon, or interest rate, of 1.319 per cent, based on prevailing market rates.
The NTMA said on Monday it had hired Barclays, Cantor Fitzgerald Ireland, Goldman Sachs, HSBC, Natwest Markets and Société Générale to lead the transaction. It was originally expected the deal would raise €3 billion.
The latest transaction brings to €10.25 billion the amount the NTMA has raised from long-term debt sales so far this year. The agency intends to raise between €14 billion and €18 billion in 2018 as it prepares for the repayment of €8.9 billion owed to bond investors in October and lines up for further redemptions in the coming years. “Today’s transaction confirms investor appetite for Irish bonds remains healthy and broad-based, enabling an increase in the transaction size to €4 billion,” said Frank O’Connor, NTMA director of funding.
The fund-raising comes as economists at UBS Bank name Ireland alongside France as the states best placed to maintain fast growth after the current euro zone economic upswing runs it course. The researchers looked at the region’s demographics, productivity and investments and came up with a ranking that captures long-term growth prospects for 10 of the region’s larger economies. They assume Europe will have to boost investment to compensate for its shrinking working population.
“While Germany is close to France in terms of investment, poorer demographics are likely to weigh on long-term growth,” UBS economists including Anna Titareva and Reinhard Cluse said in a report. “The outlook for Italy and Spain appears more challenging.”
Ireland led the euro zone in four out of six metrics analysed by UBS, relating mainly to added productivity from a growing population. That gives it the best prospects in terms of potential growth. Although the euro zone working population is projected to shrink by almost 6 per cent by 2030, it will stay broadly unchanged in France. In Germany, Europe’s biggest economy, the decline could reach 9 per cent and will likely weigh on long-term growth, according to UBS.
France leads the pack in terms of “intangible” investments such as staff training, research, development and software. These work faster to boost growth potential, although “to achieve broader productivity gains, an increase in both types of investment – tangible and intangible – will likely be needed,” the economists said.