NTMA makes a quick start on annual fundraising with €3bn bond

By Jon Ihle

The National Treasury Management Agency is expected to issue €3bn of new government bonds this morning in its first debt transaction of the year, according to market sources.

The syndicated offering of 10-year debt, which is being underwritten by a consortium of international investment banks, is likely to be the largest issuance of the year after the NTMA raised €18.5bn in 2021 to support pandemic expenditure.

The benchmark transaction could fulfil nearly one-third of the State’s fundraising requirement for the new year, which the NTMA estimated last month at €10bn-€14bn – considerably reduced from last year’s €18bn-€20bn range.

The NTMA has mandated BNP Paribas, Cantor Fitzgerald Ireland, Citi, Danske Bank, JP Morgan and Morgan Stanley as joint leads.

Cantor is the only Irish representative on the syndicate, which until last year would normally have included Davy.

Davy was removed from the NTMA’s panel of primary dealers last March after the broker was fined €4.1m by the Central Bank of Ireland for its role in a bond-trading scandal.

The firm is understood to have earned about €2m a year from its relationship with the State debt agency.

The NTMA has started every year since 2014, after the Troika departed, with a big syndicated offering to kick off the year’s debt issuance.

This year, in a sign of economic optimism, the Government is reducing its bond-market borrowing by up to 45pc due to lower expected Covid emergency spending and strong tax receipts.

Ireland has managed to borrow enormous sums at extremely low yields since the pandemic began last year, due in part to low benchmark rates and European Central Bank bond purchases.

But the dynamics that have kept yields exceptionally low for many years could be changing as the global economic recovery spurs high inflation, creating pressure on central banks to pare back support measures and raise rates. 

The Government deficit came in lower than feared due to strong corporate tax receipts.

 The NTMA will see a change at the top this year with Frank O’Connor replacing Conor O’Kelly.

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