The National Treasury Management Agency (NTMA) has said it has €27bn in cash and liquid assets on hand as of the end of June, which has significantly reduced its need to borrow over the coming years.
According to the agency’s mid-year update, despite the country’s high national debt — which is just under €221bn — the average interest rate on that debt is 1.5%, which is expected to stay relatively stable for the next three to four years.
NTMA chief executive Frank O’Connor said they were continuing to see a pattern of “favourable investor sentiment” towards Irish Government debt as the demand for it remains “strong”.
“Investors have reacted favourably to the establishment of the two new savings funds that have been entrusted to us by the Government and we are accelerating work to get these funds up and running,” Mr O’Connor said.
The NTMA said its pre-funding strategy, along with the improved fiscal position, had resulted in a reduced bond issuances at higher yields.
According to its annual report for 2023, its benchmark bond issuance last year stood at €7.4bn compared to the average of €18bn between 2017 and 2021.
Last year’s bond issuance was at a weighted average yield of 3.19%, with an average maturity of 18.5 years.
The NTMA said it was continuing to see stability in its debt-servicing costs and although Ireland’s debt is still quite large, it has one of the one of the longest average maturities in Europe at 10 years. This long average life reduces refinancing risk.
The NTMA also noted that during 2023, Ireland’s credit rating was upgraded by Moody’s and Standard & Poor’s.
According to the annual report, the rating agency’s noted the resilience of the Irish economy, strong revenue performance, and the improved debt sustainability metrics.
So far in 2024, the NTMA has issued €5bn in benchmark bonds at a weighted average yield of 2.75% and a weighted average maturity of 12.1 years. There is just one bond auction scheduled for later in this year.
In addition to asset and liability management for the Government, the NTMA manages a number of agencies and funds, including the Ireland Strategic Investment Fund (ISIF), State Claims Agency, as well as National Asset Management Agency (Nama). It will also manage the two newly established Government funds — the Future Ireland Fund and the Infrastructure, Climate, and Nature Fund.
According to the annual report, the ISIF made 23 investments during 2023 totalling €839m, bringing the total ISIF commitments to €7.2bn across 213 investments and €11.1bn of co-investment commitments since it was established in December 2014.
So far this year, the ISIF has closed a further €927m in investments.
Following the publication of the NTMA’s reports, Finance Minister Jack Chambers announced he had secured Government approval on proposed legislation to dissolve Nama.
Nama is set to be dissolved by the end of next year, with its remaining obligations being taken over by a division within the NTMA.