The National Treasury Management Agency (NTMA) sold €1 billion of bonds on Thursday, taking advantage of a slight easing of European bond rates, after they surged earlier this month on new German spending plans and mounting concerns over international tariffs.
The Republic’s funding and debt management agency sold €550 million of bonds that mature in late 2034 at a market interest rate, or yield, of 3.038 per cent, it said in a statement. It sold a further €450 million of bonds that fall due in 12 years’ time, at a yield of 3.213 per cent.
The yield on Ireland’s benchmark 10-year bonds rose from a 2.35 per cent in early December to almost 3.15 per cent last Friday – the highest since late 2023 – amid fears about tit-for-tat international tariffs, driven by US president Donald Trump’s administration, which could restoke inflation.
European yields were further propelled earlier this month as investors prepared for a surge in German public debt after chancellor-in-waiting Friedrich Merz secured political backing for a historic fiscal package and easing of the nation’s tight debt rules to allow for higher defence spending. The deal, which includes a €500 billion infrastructure fund, was passed in the national parliament on Tuesday.
However, European bond yields have come off their highs in recent days.
The NTMA bond auction brings the total it has raised in long-term bond markets this year to €4 billion.
Analysts expect that the NTMA will issue toward the lower end of its 2025 bond-sales target of between €6 billion and €10 billion. The agency is led by chief executive Frank O’Connor.
The Department of Finance forecasts the general Government surplus will amount to €9.7 billion this year, following on from an estimated record €23.7 billion out-turn for 2024. Some €11.5 billion of existing bonds were redeemed by the NTMA last week on schedule.
Recent issuance has been well below the average of more than €18 billion a year between 2017 and 2021, skewed by large deals during the Covid-19 crisis as the Government funded support for households and businesses.
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Strong Irish economic growth over the past decade or so has seen the government’s debt-to-GDP (gross domestic product) ratio fall to 41.4 per cent, according to the NTMA. The ratio peaked at about 123 per cent in 2013, as the State emerged from an international bailout programme.
The Organisation for Economic Co-operation and Development (OECD) said in a report on Thursday that Ireland is one of six out of its 38 member countries that saw their debt-to-GDP ratios come in lower last year than their average for the five years before the Covid-19 pandemic.
It forecasts that the aggregated debt ratio for the OECD is to rise one percentage point this year to 85 per cent, which is more than 10 points higher than in 2019 and nearly double the 2007 level.
“Global debt markets face a difficult outlook. The pre-2022 dynamics of low rates and central bank support did not return in 2024. Bond yields in several key sovereign markets rose despite policy rates falling, while both sovereign and corporate indebtedness increased,” the OECD report said.
“This combination of higher costs and higher debt risks restricting capacity for future borrowing at a time when investment needs are greater than ever. Past borrowing, a legacy of the 2008 financial crisis and the Covid-19 pandemic, has been used primarily to facilitate recovery, leaving many long-term investment needs unaddressed.”
It added: “Against this difficult backdrop, which includes heightened geopolitical and macroeconomic uncertainty, debt markets must meet the complex challenge of financing long-term, sustainable growth.”
