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

NTMA received bids of €1.96 billion

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

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.

Peter Hamilton

Peter Hamilton

Peter Hamilton is a contributor to The Irish Times specialising in business