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NTMA to borrow €2bn in bond deal

THE GOVERNMENT plans to borrow up to €2bn in a move that is being hailed as a return to the market.

The National Treasury Management Agency (NTMA) will seek to borrow the cash at interest rates below the 3.5pc charged under the bailout in a system called a "syndicated tap".

A syndicated tap is the sale, at a pre-determined price, of additional amounts of an existing bond through a number of appointed banks and is open to all institutional investors.

The money will be borrowed for five years by increasing the size of an existing bond deal due to be repaid in four years. It is expected that the deal was likely to be in the range of €1.5bn to €2bn.

Owen Callan, senior fixed income strategist at Danske Bank Markets, said that the move was positive for the future economy.

"Ireland, via the NTMA, has just announced its long awaited return to the market via a long term syndicated bond deal," he said.

"Whilst Danske Bank has been predicting the move for the past few months, it still marks a massive step in Ireland's long process of fully regaining long term bond market access, and fully normalising its primary market issuance, in 2013.

"We expect another one or two syndicated bond issuances during the course of the year.

Donal O'Mahony, an analyst at Davy Stockbrokers, predicted that there will be strong demand among investors for the bonds.

The NTMA is under pressure to re-establish itself as a regular bond issuer before the bailout ends at the end of this year, even though there is no pressing need to raise the cash.