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 Irish Times - Business - - BUSINESS NEWS - JOE BREN­NAN

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.

Out­look

“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.

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