NTMA opens latest syndicated bond sale to plug Covid-19 deficit

The National Treasury Management Agency has this morning started the sale of a new 10-year bond, its third so far this year via a syndicate of banks.

A market source said the new bond could raise €4 billion to plug the country’s growing budget deficit. 

The NTMA has been tasked with raising €20-24 billion this year compared to the €10-14 billion envisaged at the start of 2020 to fund extra spending resulting from the coronavirus-related shutdown of the economy. 

Having raised €12.5 billion so far this year, the National Treasury Management Agency cancelled a planned auction in favour of a syndicated sale after investor feedback suggested demand was likely to outstrip a typical auction size. 

In funding their coronavirus stimulus programmes, government borrowers are relying much more heavily on syndications, helping them to target a bigger investor base and larger issuance. 

The NTMA yesterday mandated Barclays, BNP Paribas, Danske Bank, Davy, NatWest Markets and Nomura to sell the bond. 

The Government announced on Friday that it would accelerate the cautious unwinding of its coronavirus lockdown with the fourth and final phase of easing restrictions to start on July 20, three weeks earlier than scheduled. 

It expects to turn 2019’s budget surplus into a deficit of between 7.4% and 10% of gross domestic product this year. 

Data last week showed the country’s tax intake has been broadly stable so far this year as bumper corporate tax returns and greater than expected resilience in income tax and VAT receipts staved off a forecast collapse. 

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