In January the National Treasury Management Agency (NTMA) raised €3.5 billion through the syndicated sale of a new 10-year benchmark Treasury Bond maturing in October 2032. Cantor Fitzgerald Ireland was delighted to be once again appointed as a lead manager on the deal working alongside joint leads Citi, BNP Paribas, Danske Bank, J.P. Morgan and Morgan Stanley. This was the 6th successive year that Cantor Fitzgerald Ireland was invited by the state to participate in Irish primary issuance. In total Cantor Fitzgerald Ireland has helped the Government to raise over €24 billion.
The new €3.5 billion benchmark bond has a 0.35% coupon and was priced at a spread of 1 basis point above the mid swap rate to give a re-offer yield of 0.387%. The bond came at an attractive 8 basis points over the equivalent French 10-year bond with the NTMA taking advantage of supportive market conditions.
There was strong investor demand from a wide geographic spread, the final order book closed in excess of €27 billion (inclusive of €3.6 billion from the joint lead managers) with over 180 individual accounts participating.
International investors accounted for 93% of the issue and there was a large geographical distribution of investors. The UK took 30% of the deal, Italy and the Nordics took 13% each, Germany, Austria and Switzerland accounted for 11%, France/Benelux took 10%, followed by Spain and Portugal with 7% each. America and the rest of the world got 9% and Irish accounts received 7%. The main investor categories were banks 42%, followed by fund managers 27%, official institutions 17%, hedge funds 8%, and pension & insurance 6%.
The deal reflected the continued support for Irish debt from global investors, with Ireland’s impressive fiscal position reflected in the robust tax revenues in 2021, which saw overall receipts at a record €68.4 billion, an increase of €11.2 billion – or almost 20% – compared to 2020. This resulted in an Exchequer deficit of just €7.5 billion for 2021. Ireland is in a very strong funding position heading into 2022 and the smaller than usual amount issued in the syndication reflects the lower funding range of €10-€14 billion, announced by the NTMA for 2022. This number being significantly below the 18.5bn Ireland borrowed in 2021.
Following on from the successful sale, Ireland welcomed an upgrade from rating agency DBRS in January to AA (low) with a stable outlook. The DBRS cited Ireland’s impressive macroeconomic performance throughout the pandemic as the main reason behind their move which now aligns them with Fitch and S&P, which also confirmed its rating on Ireland at the end of January. The strong growth achieved in the past two years will allow Ireland to reduce the debt ratios lower in the coming years and reflects the positive market sentiment from international investors DBRS said. The move means that Moodys are now the only rating agency that does not give Ireland AA status. Moodys will hopefully correct that when it next reviews Ireland in May.
William Mullane is an Institutional Bond Sales Manager at Cantor Fitzgerald Ireland.
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