NTMA raises €750m in bond auction

The State sold €750 million of debt yesterday but paid a premium over a similar auction earlier in the year amid increased bond-market volatility.

The National Treasury Management Agency at a yield of 2.216 per cent at the auction of 15-year bonds, the last scheduled auction in the first half of this year. In February, the same 2030 bond sold at a yield of 1.56 per cent.

Bank of Ireland was also active in the debt markets, raising €750 million in Additional Tier I capital. The bank is paying a yield of 7.375 for the money.

International buyers accounted for 98 per cent of the bank funding, which was seven times oversubscribed.

Group treasurer Sean Crowe said the success of the fundraising was “yet another milestone in the bank’s evolution”. The demand underlined the “continued investor confidence in the bank’s progress”, he said.

Investor demand

Frank O’Connor, NTMA director of funding and debt management, said the agency was pleased with investor demand for the State debt despite recent market volatility. The bond issue was 2.9 times oversubscribed, roughly in line with the series of NTMA auctions over the past year.

“While the yield is higher than our last 15-year bond auction in February, our borrowing costs remain low by historical norms,” he said. The recent upgrade by Standard & Poors of Ireland to A+ was a help, he said.

The NTMA has now raised €11 billion in the bond markets this year. “Given our overall funding target of €12-15 billion, we have most of our funding now complete,” said Mr O’Connor.

Periphery countries

Irish bond yields had risen ahead of the auction along with those of Spain and Italy.

The auction of an aggregate of €12.7 billion in debt – the first time three euro zone periphery countries had tapped the market on the same day – was seen as testing demand in a market jittery after the latest rout, spurred by strong inflation and growth data.

In the event, yields on the debt of all three countries pushed lower after the auctions. – (Additional reporting, Reuters)