THE Government is planning to raise €1bn in a bond auction this week, surprising analysts who expected this round of fund-raising to be modest. The auction of a 10-year bond at 3.4pc takes place on Thursday, just weeks after the State’s first post-bailout bond auction, which also raised €1bn at record low borrowing costs.
The Government had previously dipped its toes in the water with syndicated debt sales, sold through banks. This latest decision means that €5.75bn will have been raised by the end of April, out of a total annual target of €8bn. Another bond auction is planned for May. The country is already fully funded through to 2015. Demand for Irish bonds has strengthened since ratings agency Moody’s upgraded the country’s debt to investment grade from junk in January.
Analysts had expected the April and May sales to be slightly smaller in scale, with Ryan McGrath of Cantor Fitzgerald predicting fundraising of between €500m and €750m. “We would expect that the next issue size will be less than last month’s €1bn tap” he said last week. “Balancing market visibility with limited funding needs is a consistent challenge for the NTMA.”