National Treasury Management Agency (NTMA) sells 2.5 billion of Irish Bonds

The National Treasury Management Agency (NTMA) has sold €2.5 billion of its 2017 bonds in this morning’s auction, its first bond sale in years.
The NTMA said this afternoon that the money were raised at a yield of 3.316 percent, through the sale by way of syndicated tap of its Treasury Bond which matures in October 2017. The total bids received amounted to some €7 billion.
Of the amount issued today 13 percent was taken up by domestic investors and 87 percent by abroad investors, the NTMA said. The abroad investors were chiefly from the United Kingdom (35.6 percent), Nordic countries (12.4 percent), Spain (9.5 percent), and Spain (7.2 percent), it said. Outside of Europe, the US and Asia together accounted for less than four percent.
“There was broad investor interest in the issue with over 200 investors submitting bids, including fund managers, banks, pension money and insurance firms,” said the statement.”
The sale was welcomed by Taoiseach Enda Kenny. Central Bank governor Patrick Honohan said the current spread on long-term Irish sovereign debt is a “poor reward” for the nation’s efforts to narrow the fiscal deficit
“This, coupled with the fact that the general bids totalled around €7 billion, is very positive and suggests that Ireland is gradually regaining creditworthiness in the eyes of international investors.
Demand for today’s bond was high from the outset, with a variety of international investors involved,” said Owen Callan, senior fixed income strategist at Danske Bank Markets.
Callan said that the issuance ought to fully clear Ireland’s “funding cliff” in January 2014 and will even be important for Ireland’s hopes of getting positively re-rated by the major ratings agencies.
But finance minister Michael Noonan told reporters this afternoon that Irish borrowing costs may rise again if there is no deal with Europe on bank debt. They said that Spain backs pledges made on June 29th to deal with the issue of unsustainable debt stemming from the banking crisis.
“It ought to also support further steps by the Irish banks in regaining market access of their own in the work of 2013. Overall its a great start to the year for the NTMA they said.
In a later statement, Noonan said the NTMA’s issuance was a very welcome and positive development and builds on successful issuances last year. They said that the level of demand for the issuance was “particularly encouraging and was primarily from foreign investors.”

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