Analysts differ NTMA's bond market return

Following reports that the National Treasury Management Agency (NTMA) could return to the markets this week with another bond swap, analysts are differing on its timing.

It has been suggested that the NTMA could complete another bond swap this week to coincide with the European Central Bank’s (ECB) liquidity initiative. The ECB is set to launch its second three-year loan offering of cheap money to prop up the banking sector.

If the NTMA was to go ahead with the deal, it would involve exchanging existing debt for new bonds with a later repayment date. Last month it successfully swapped €3.53 billion in 2014 bonds, into 2015 bonds.

According to NCB Stockbrokers, Ireland’s 2013 bonds are the most likely target of a second switch.

"Last month you were offered an extra 25 basis points to accept the cash-for-cash switch out of 14s into 15s," said Cathal O’Leary, head of fixed-income sales. "It’s difficult to estimate, but with a €6.03 billion issue size for the 13s you would expect terms of close to 50 basis points will be required to entice a similar or greater take up to last month’s €3.53 billion exchange.

"The NTMA will have been marketing internationally in recent weeks and will be well aware if there is any pent up demand for Irish debt," Mr O'Leary added.

Glas Securities however, said such a time frame “appears ambitious”, arguing that a deal is likely to be “off the table” until after February 29th given last week’s relatively low turnover. But, it added that such a deal was still likely at some stage.

"We would not rule out further switch moves from perhaps the 2013 issue into the new 2015 bond…or perhaps offering terms to switch into the open 2017 window," it said in a note.