NTMA 2015 Annual Report and 2016 midyear update

14 July 2016

  • Ireland's debt dynamics improving but debt remains high in absolute terms
  • Interest cost on Ireland's debt fell below €7bn in 2015, helped by early repayment of IMF loan facility
  • Assessing long-term impact of "Brexit" vote on Irish credit spreads will take time
  • Strategic Investment Fund pipeline is healthy and varied

14 July 2016 - The National Treasury Management Agency (NTMA) today published its 2015 Annual Report and delivered a midyear update for 2016 across its five business areas.

"During 2015 and into 2016 the continued improvement in Ireland's public debt dynamics has been reflected in the very substantial reduction in Ireland's borrowing costs and successive credit rating upgrades culminating in Ireland regaining A status from all the major ratings agencies," said NTMA Chief Executive Conor O'Kelly.

Against this backdrop the NTMA has taken the opportunity to lock in lower interest rates and longer maturities, most notably through the issuance last year of Ireland's first 30-year benchmark bond. The weighted average maturity of Ireland's debt is now 12 years compared with 7 years at the end of 2012.

While our debt dynamics are currently favourable, we do face challenges. Firstly, the supportive environment provided by the ECB's quantitative easing programme should not be underestimated. Secondly, as I have said before our debt is over €200 billion and the UK referendum outcome is a reminder that Ireland is not immune to domestic or external shocks.

Capital markets have been volatile in the wake of the UK referendum result and it will take time before we can properly assess the long-term impact on Ireland's credit spreads. However, Ireland's funding position is strong and the NTMA, having raised some €6 billion of its full-year target of €6-10 billion in advance of the UK vote, can monitor developments without any immediate funding pressures."

Turning to the Ireland Strategic Investment Fund, Mr O'Kelly said the Fund's first full year of operations was a productive one with €759m of investment commitments, bringing the year-end total to over €2 billion. The Fund expects its total Irish investment commitments to reach close to €3 billion by end 2016 and has already announced commitments in the areas of student accommodation, residential housing, SME finance, agri-finance, renewable energy, technology and venture capital. It is also working on initiatives that could help with housing supply in a manner consistent with the commercial mandate given to it by the Oireachtas.

"I am pleased to report that the pipeline of investment opportunities being looked at by the Fund is healthy and varied, which augurs well for its investment programme over the coming years," said Mr O'Kelly.

Key points H1 2016

  • The NTMA funded the majority of its requirement for 2016 in the first half of the year, raising some €6 billion of its full-year target of €6-10 billion at a weighted average yield of 0.95%
  • The NTMA issued Ireland's first 100-year note (€100m) at a yield of 2.35%
  • Moody's lifted Ireland's long-term sovereign credit rating to A3 (with a positive outlook), joining S&P, Fitch, DBRS and R&I in assigning an A-category rating to Ireland
  • Ireland's first healthcare Public Private Partnership (PPP) reached financial close and construction got underway on 14 new Primary Care centres across the country. The project is the first healthcare project in Ireland to benefit from EIB support and one of the first PPPs in Europe to benefit from EFSI funding
  • Construction was completed on Schools PPP Bundle 4 (four schools providing approx. 3,000 places in Clare, Cork, Louth and Tipperary)

Key points 2015

  • The NTMA issued €13bn of bonds during 2015 (2014: €11.75bn) at a weighted average yield of 1.51% (2014: 2.84%) and a weighted average maturity of just under 18 years (2014: just under 12 years)
  • Ireland issued its first 30-year bond (€4 billion issued at a yield of 2.1%)
  • 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
  • Interest on Ireland's debt fell below €7bn in 2015, from almost €7.5bn in 2014
  • The Ireland Strategic Investment Fund had investments both directly and through investment funds in 108 Irish companies/projects:
    - generating combined revenues of €1,229m, €358m in exports and €505m in wages and salaries
    - supporting almost 18,000 jobs directly and indirectly
    - contributing Gross Value Added of €538m to the Irish economy
  • The NDFA delivered 15 (non-PPP) school projects providing 8,600 pupil places and construction commenced on the Courts Bundle PPP project
  • NewERA provided commercial and financial advice to Government on a range of issues including the first joint venture between Bord na Mona and Coillte to finance, construct and operate a 64 MW wind farm and the Coillte Telecoms disposal
  • NewERA further enhanced its Shareholder Expectations Framework with a focus on development of formal financial targets for commercial State bodies
  • The State Claims Agency commenced the rollout of the National Incident Management System (NIMS), making Ireland the first country worldwide to have implemented a single ICT system to support the management of risk across its public service, including the healthcare sector
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