The National Treasury Management Agency (NTMA) plans to raise as little as €6 billion in bond sales next year as it seeks to maintain links with global debt investors, as the next government is set to enter power with the benefit of a large projected budget surplus.
The State’s debt management agency said on Thursday it will seek to issue between €6 billion and €10 billion of bonds during 2025. Much of this will be covered by at least one deal being carried out by a group, or syndicate, of banks and securities firms.
The NTMA said it does not plan to be active in the short-term treasury bills market next year.
The agency, led by chief executive Frank O’Connor, sold just €6 billion of bonds in 2024, at the bottom end of its targeted range, and slightly below the figure of about €7 billion raised in each of the two previous years.
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Recent issuance has been well below the average of more than €18 billion a year between 2017 and 2021, skewed by large deals during the Covid-19 crisis as the government funded supports for households and businesses.
The Department of Finance estimates the general government surplus this year will reach a record €23.7 billion, equating to 7.5 per cent of the size of the domestic economy–– (measured as gross national income-star).
This has been turbocharged by windfall corporate taxes and the booking of about €14 billion of back taxes from iPhone maker Apple, following the conclusion of long-running EU legal challenges surrounding the matter in September.
Parties vying for votes in the general election have pitched various ways the surprise Apple tax could be spent.
A €9.7 billion surplus is forecast for next year. About €14 billion of existing government debt, including bonds and bailout-era loans from the EU, are due for redemption in each of the next two years.
Gross government debt currently stands at €220 billion. The NTMA held about €25 billion of spare cash at the end of last year, and the agency has said that figure “will likely remain elevated”.
“The NTMA is cogniscant of the need to maintain a funding presence in global debt markets,” said Michael Cummins, head of fixed income (bonds) at Davy. “It’s prudent to support trading activity and turnover in Irish government bonds, particularly given the large investment programmes recently outlined by government parties, the increasing concern over US policy and the potential impact on Irish tax receipts going forward”.
The Republic has secured a series of credit ratings upgrades over the past decade after exiting its international rescue programme. Most recently, S&P Global Ratings raised the outlook on its AA rating for Ireland on November 15th to positive from stable.
“We could raise the ratings in the next 24 months if Ireland continues to rebuild economic and fiscal buffers, improving further the country’s resilience to external shocks,” S&P said. “Such an action is also likely to be contingent on Ireland maintaining economic competitiveness, particularly in the outward facing multinational sector.”
The market interest rate, or yield, on the Republic’s 10-year bonds – a benchmark for government borrowing costs – has fallen to about 2.47 per cent from 3.12 per cent since early June, as the European Central Bank (ECB) has cut official rates at pace amid signs it is regaining control over inflation.
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