Ireland will raise 7-11 billion euros in the financial markets next year as the government’s strong fiscal position reduces the need for new debt.
The National Treasury Management Agency (NTMA) this morning confirmed the proposed bond issuance in its 2023 financing plan.
The funding range is below last year’s plan of €10-14 billion, of which only €7 billion was raised as strong tax revenues reduced government bond needs in 2022.
The agency said it will hold only one syndicated bond deal next year and does not expect to issue any Treasury bills — short-term debt instruments — due to its “strong funding position.”
“Our 2023 borrowing plans reflect our strong cash balance, projections for a fiscal surplus and relatively low levels of maturing debt over the coming year,” said Dave McEvoy, NTMA director of financing and debt management.
“We continue to have considerable flexibility in meeting Ireland’s borrowing needs. This is the result of our long-standing strategy of pre-financing with one of the longest maturity profiles in Europe and lower debt repayments in the medium term.”
As of October, the NTMA had €27 billion in cash after borrowing heavily at low interest rates during the Covid-19 crisis.
A strong post-pandemic economic recovery has boosted tax revenues dramatically this year as well, with personal income tax, VAT and corporate taxes all rising sharply, resulting in a small but unexpected budget surplus into 2023.
Ireland was last in the markets on September 1st when the NTMA sold €1.25bn worth of new bonds.
This auction followed canceled sales in June and August due to Ireland’s strong fiscal position as post-pandemic tax revenues flowed into the Treasury.
The NTMA then announced in late September that it would no longer borrow in 2022, having borrowed just €7 billion.
The agency now appears to be staying at about the same level in the markets, more to maintain liquidity and relationships with investors than because the state needs fresh funds.
“Ireland is in a unique position among its peers in not needing access to markets in 2023 as the country is already fully funded in the medium term,” Cantor Fitzgerald Ireland’s head of fixed income strategy Ryan McGrath said in a preview note Wednesday .
“Maintaining both a market presence and a liquidity curve will be the primary reason behind any NTMA decision to access markets over the next year.”
Cantor said a projected budget surplus of 10 billion euros should be enough to cover the 8 billion euros in bond maturities even in 2024, meaning the NTMA will most likely be minimal in markets for two years.
https://www.independent.ie/business/budget/ntma-confirms-minimal-borrowing-needs-in-2023-bond-plan-42187788.html NTMA confirms minimum borrowing requirement in 2023 bond plan