State raises €1bn in 10-year bonds at record low

The National Treasury Management Agency has raised €1 billion in 10-year borrowings with a negative yield, a record low for such borrowing.

More than €6.6 billion of these 10-year bonds have already been issued and they carry a coupon – the annual interest payment a bondholder receives – of 1.1 per cent.

The National Treasury Management Agency said the money was raised on Thursday morning via an auction of bonds carrying a negative yield of minus 0.051 per cent to investors. The last time it issued such debt, it carried a yield of 0.136 per cent.

The NTMA said that for the latest loans it had received bids amounting to €1.96 billion – almost twice the target amount.

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Target

With the completion of today’s auction, the NTMA has issued €12.25 billion of benchmark bonds so far this year. Its full-year target is to issue between €14 billion and €18 billion of long-term debt.

Low interest rates have offered significant advantages for the State in raising borrowings to refinance maturing loans. In July the NTMA raised €500 million in 11-month borrowings at a rate of minus 0.54 per cent.

Raising new cash at lower interest rates slowly reduces the average interest rates paid on all borrowings and delivers significant benefits to the exchequer.