NTMA 2014 Annual Report and 2015 midyear update

23 July 2015 - The National Treasury Management Agency (NTMA) today published its Annual Report for 2014 and delivered a midyear update for 2015 across its businesses: funding and debt management, the Ireland Strategic Investment Fund (ISIF), the National Development Finance Agency (NDFA), NewERA and the State Claims Agency (SCA).

NTMA Chief Executive Conor O'Kelly, commenting on the first six months of 2015, said:

"The first half of the year saw two developments that are particularly positive for Ireland's debt dynamics - the issue of our first ever 30-year bond and the completion of the early repayment of just over €18 billion of Ireland's IMF loan facility using cheaper, long-term market funding and generating interest savings in excess of €1.5 billion over the original lifetime of the IMF loans. The weighted average maturity of our long-term marketable and official debt has improved from 7.3 years at end 2012 to approximately 13 years now."

Mr O'Kelly also commented on the €7.6 billion Ireland Strategic Investment Fund (ISIF), which was established in December 2014 as the successor fund to the NPRF and recently published its investment strategy and a baseline economic impact report.

"The publication of the ISIF's strategy and economic impact report have put an important stake in the ground for the new fund in terms of how it will seek to deploy its resources over the next 3-5 years and how its impact can be gauged. The ISIF's healthy pipeline of investment opportunities is encouraging and it remains on track to achieve its goal of having between €500 million and €1 billion of committed investment by the end of this year."

The improved funding environment has also been reflected in the long-term debt market for Public Private Partnerships and the NDFA has seen project funding costs decline from over 6% to approximately 3% over the past 18 months. Overall the NDFA is currently advising on 20 projects with a capital value in excess of €3.5 billion of which €650 million is being procured directly by the NDFA.

During 2014 and 2015 NewERA further developed its role of providing a dedicated centre of corporate finance expertise to Government. The sale of the Ervia energy business was successfully completed in June 2014. NewERA has also developed a Shareholder Expectations Framework intended to provide clarity and guidance for each of the commercial State bodies within its remit in relation to the Government's strategic priorities, policy objectives, financial performance and reporting requirements. The economic importance of these bodies to the State is underlined by the fact that they collectively generated revenue of €6.6 billion and employed capital of €13.6 billion.

In 2014 and 2015 the State Claims Agency's remit was significantly extended with the delegation to it by Government of the management of personal injury and third-party property damage claims in respect of additional public bodies, more than doubling the total number within its remit from 56 to 129. The SCA went live in 2014 with the National Incident Management System (NIMS), an end-to-end risk management tool. Ireland will be one of the first countries worldwide to have a single ICT system to support the management of risk across its public service, including the healthcare system. Mr O'Kelly said:

"The development and use of the NIMS system is critical in supporting authorities to better manage their risks so as to reduce the incidence of claims. The size of this risk universe can be gauged from the fact that it includes over 200,000 State employees and 7 million user contacts with the public healthcare system annually."

In conclusion, Mr O'Kelly said:

"The NTMA is proud to play its part in contributing to Ireland's continued economic recovery and during my first six months here I have been struck by the shared commitment to this goal among our staff across the range of our mandates."

H1 2015 and 2014 highlights
  • €11 billion was raised in the bond markets by midyear 2015, representing almost three quarters of the upper end of the NTMA's full-year funding target of €12-15 billion. This includes Ireland's first ever 30-year bond in February 2015 in an amount of €4 billion at a yield of 2.1%. The weighted average yield/life of H1 2015 funding is 1.5%/18 years.
  • The weighted average yield on €11.75bn of long-term bond funding raised by the NTMA in 2014 was 2.8% and the average life was 12 years.
  • The NTMA completed the early repayment of €18 billion (the more expensive portion) of Ireland's IMF loans, generating interest savings in excess of €1.5 billion over their original lifetime.
  • During 2014 a series of credit rating upgrades had a significant impact on bond yields and investor sentiment towards Ireland. Moody's restored Ireland's rating to investment grade with a rating of Baa3 in January 2014 followed in May by a further two-notch upgrade to Baa1. Fitch upgraded Ireland's rating to A- in August 2014. Standard & Poor's upgraded Ireland to A- in July 2014, to A in December 2014 and to A+ in June 2015.
  • €50 million was invested by the ISIF in the Malin Corporation IPO in March 2015 helping to secure a commitment from Malin to create 200 jobs and invest €150 million in Ireland. The ISIF has a strong activity pipeline with more than 60 proposals under consideration. The ISIF has also finalised and published its investment strategy and is on course to committing between €500 million and €1 billion to investment in Ireland in 2015.
  • The NDFA appointed preferred tenderers for the Primary Care Centres and Courthouses Public Private Partnership projects in 2015 while the construction of Schools PPP Bundle 3 was completed on time and on budget in 2014. In 2014 the Schools Bundle 4, N17/N18 project and Dublin Waste to Energy PPP projects all reached financial close, a significant project milestone, and construction is now well underway. The NDFA has seen very substantial reductions in project funding costs.
  • NewERA provided advice and project management services to Government in relation to the sale of the Ervia energy business which completed on 30 June 2014. Dividends to the State arising from the sale and planned subsequent re-gearing are expected to be up to €1 billion (with the first €150 million paid in 2014). During 2014 NewERA provided financial analysis and recommendations to Ministers on €2.6 billion in financing-related proposals and €0.6 billion in capital expenditure project proposals from State companies within its core remit. It is also noteworthy that in 2014 NewERA was asked to perform a significant amount of work in respect of bodies outside its core remit with its report on RTÉ published in April 2015.
  • In 2015 the State Claims Agency intends to roll out the National Incident Management System to a further 36 State Authorities including the healthcare sector which, in itself, comprises over 2,600 locations. When fully deployed, Ireland will be one of the first countries worldwide to have a single ICT system to support the management of risk across its public service.
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