The National Treasury Management Agency (NTMA) sold €1 billion of long-term bonds in an auction on Thursday as market interest rates internally dipped on the back of a surprise move by the Swiss central bank to cut rates.
The NTMA, which is responsible for managing funding for the Irish Government, sold €500 million of 10-year bonds, with the price putting the market interest rate – or yield – on the notes at 2.75 per cent. That is 0.05 percentage points below what the agency’s existing 2034 bonds had been yielding on Wednesday.
It also sold €500 million of bonds due to mature in 2043, priced to carry a yield of 2.95 per cent. The NTMA received over €1.9 billion of orders from investors for the €1 billion of bonds on offer.
With the completion of the auction, the NTMA, led by chief executive Frank O’Connor, has now sold €4 billion of benchmark bonds so far in 2024. That is the equivalent of two-thirds of the bottom end of its targeted range for the year. It aims to raise a total of €6 billion and €10 billion in 2024.
The Swiss National Bank’s (SNB) move to unexpectedly cut its key interest rate by a quarter of a percentage point, and signals from the US Federal Reserve that three rate reductions are likely on the way in that economy this year, served to push down euro zone bond yields on Thursday.
Meanwhile, Bank of England governor Andrew Bailey said at midday that the UK economy was “moving in the right direction” for his organisation to start cutting interest rates.
The Bank of England’s interest rate-setters voted 8-1 to keep borrowing costs at their 16-year high of 5.25 per cent.
Still, the European Central Bank has tried to cool talk about a run of rate cuts for the euro zone that has gathered steam as investors increasingly consider the fight against global inflation to have been won. – Additional reporting, Reuters
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