NTMA borrows for 10 years at 2.749pc

The Irish Government borrowed €1bn on Thursday on the bond market. The National Treasury Management Agency (NTMA), which manages fund raising for the State, borrowed borrowed €500m due to be repaid in 2034 at a yield, or interest cost, of 2.749pc and €500m due in 2043 at a yield of 2.949pc.

The bond auctions were both oversubscribed, in particular the 10 year debt.

The price paid is well above the kind of zero rates Ireland could command during Covid but significantly below the ECB rate and compares to 10 year yields for France (2.84pc) and Belgium (2.939pc) and Spain (3.2pc) but is more than Germany’s 2.403pc yield.

The latest move means the NTMA has now raised €4bn of its target to borrow between €6bn and €10bn over the course of this year.

The 2034 bonds are straight-forward 10-year debt, the benchmark for market pricing. The debt due to be repaid in 2043 is a so-called “green bond”.

In theory the green bonds widens the pool of potential investors by engaging institutions that specialise in environmental, social and governance (ESG) investing.

The NTMA issued its first green bond in 2018. Since then, the Government has allocated over €7bn to eligible green projects, meaning the issuance is likely to significantly increase the amount being committed under the funding scheme.

Thanks to buoyant tax receipts and record budget surpluses, the NTMA issued just €7bn of new debt last year, which was at the lower end of its funding range.

The Government reported a general budget surplus of just under €8bn in 2023 and expects another surplus in 2024, meaning it has no pressing need to borrow on the markets but it is seen as important to maintain a market position, for when that inevitably changes, as well as a means to raise long-term financing for capital projects.