Although Ireland slipped back into recession this week, it seems that some sectors of the economy are doing alright in the downturn. This week in the Dail we found out that six firms shared a payday of €8m between them when the NTMA sold €5bn of 10-year bonds earlier this month. The NTMA appointed so-called “joint lead managers” to sell the bonds on its behalf and Minister for Finance Michael Noonan, in a reply to a parliamentary question from the Sinn Fein finance spokesperson, Pearse Doherty said that the NTMA had paid six named firms a total of €7.79m and a further 11 unnamed firms were paid nearly €1m.
Minister Noonan said that the NTMA handed over 0.175% of the €5bn issued in fees to the 17 companies, with the six lead managers sharing 89% or €7.785m and the 11 “primary dealers” were paid €962,500.
Nice work if you can get it.
The parliamentary question and response are here.
Deputy Pearse Doherty: asked the Minister for Finance the fees payable to the joint lead managers, Barclays, Danske Bank, Davy, Goldman Sachs International, HSBC and Nomura, which have been mandated by the National Treasury Management Agency in respect of a recently announced issue of a March 2023 bond.
Minister for Finance, Michael Noonan: Ireland successfully issued a new €5 billion benchmark bond on 13 March at a yield of 4.15%. This sale was the National Treasury Management Agency’s (NTMA) first new 10-year issuance since January 2010 when €5 billion of the October 2020 bond was issued at a yield of 5.091%. The NTMA recognises seventeen Primary Dealers in Irish Government Bonds all of which are members of, and regulated by, the Irish Stock Exchange. Primary Dealers have obligations with respect to market-making in Irish Government bonds, an essential role in the provision of liquidity to investors. Primary Dealers have bidding obligations in respect of bond and Treasury Bill issuance by auction. They also advise the NTMA with respect to issuance and assist with the marketing process as well as producing research designed to assist investors.
The NTMA chose six of the Primary Dealers, Barclays, Danske Bank, Davy, Goldman Sachs International, HSBC and Nomura to be joint lead managers having significant roles in the new ten-year bond sale whilst the other eleven Primary Dealers were co-leads in the syndicate with lesser roles.
The NTMA has advised that the fee payable to the syndicate of banks was 0.175% of the nominal debt issued. This is the standard fee for the issue of bonds of a ten year maturity by syndication in the euro area sovereign bond market and is also, for example, the fee paid by the European Investment Bank, which has a ‘AAA’ credit rating, for its ten-year bond issuance. Based on the €5 billion issued, the total fee was €8.75 million. Of this amount 89 per cent is split evenly between the six joint-lead managers, with the remaining 11 per cent divided equally between the other eleven co-lead banks. The fee represents an annualised cost of 0.02 per cent over the life of the bond.
It is important to emphasise that the team of Primary Dealers chosen to manage the transaction assisted in building a strong order book, with some 400 investors submitting bids, including fund managers, banks, pension funds and insurance companies. The total bids received amounted to some €13 billion. This clearly demonstrates that Ireland has regained access to the international debt markets. The size of the order book and the broad investor interest is a strong signal of confidence in Ireland.