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Govt wants to slash 2016 funding needs

Monday, July 28 15:18:19

The Government will look to cut further its funding requirements for 2016 after a bond swap and buyback earlier this month that smoothed its debt profile, the head of the country's debt agency said today.

Ireland is fully funded for 2014 and has already raised almost 90 percent of the E8 billion needed to pre-fund itself for 2015, much of it at record low yields.

It cut its funding needs for 2016 by 2 billion euros with the swap and buyback, the latest move to even out a repayment schedule that many analysts thought would leave Ireland needing a second bailout before a first bond swap in January 2012.

"Having restored full market access, our attention has now turned to the next significant maturity, the 2016 bond," National Treasury Management Agency (NTMA) chief executive John Corrigan said in a statement.

"We are targeting further "top-slicing" of the 2016 bond with the aim of smoothing the debt maturity profile."

Ireland is also seeking to repay some of its bailout aid early to reduce the cost of carrying its debt. Euro zone finance ministers are likely to discuss in September whether to allow it repay more expensive loans from the International Monetary Fund before paying back the euro zone bailout fund.

The NTMA has so far raised E7 billion this year through five bond auctions, which have confirmed Ireland's full return to normal market lending following the State's exit from the EU/IMF bailout programme.

"We have moved from the opportunistic and syndicated issuance, which characterised our initial return to the markets, to a series of scheduled bond auctions, marking the final step in achieving normal bond market access," Mr Corrigan said.

"Having restored full market access, our attention has now turned to the next significant maturity, the 2016 bond, which was reduced to E8 billion (from just over E10 billion) by the NTMA's buyback and switch offer earlier this month. We are targeting further 'top-slicing' of the 2016 bond with the aim of smoothing the debt maturity profile."

Mr Corrigan said the new governance structure for the NTMA, which will involve its various boards and committees being replaced by a single overarching board to oversee all of its functions, would be completed in the autumn, along with the establishment of the Strategic Banking Corporation of Ireland, which will provide finance to SMEs.

For more visit: www.businessworld.ie