Ireland to test markets with first post-bailout bond

DUBLIN Mon Jan 6, 2014 3:34pm GMT

Irish Minister for Finance Michael Noonan gestures during an interview with Reuters at his offices in central Dublin December 16, 2013. REUTERS/Cathal McNaughton

Irish Minister for Finance Michael Noonan gestures during an interview with Reuters at his offices in central Dublin December 16, 2013.

Credit: Reuters/Cathal McNaughton

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DUBLIN (Reuters) - Ireland is to test international bond markets for the first time since exiting its EU/IMF bailout with a new syndicated 10-year bond, the country's debt agency said on Monday.

The sale, which traders said was likely within days, will be Dublin's first bond issue since March, when it sold 5 billion euros (£4.1 billion)of 10-year paper.

It will be a test of market confidence in Ireland's recovering economy and set a benchmark for Greece, Portugal and Cyprus, the three euro zone states still under sovereign bailout programmes.

Dublin, which formally exited its EU/IMF bailout on December 15, is already funded into 2015.

But its NTMA debt agency wants to resume regular bond auctions to demonstrate the country had returned to "business as usual" and to insure itself against possible future market turbulence.

The agency gave no details of the size of the issue, while a source familiar with the transaction said guidance was for around 3 billion euros.

Ireland's economy, which has shown signs of picking up steam - the jobless rate has fallen to 12.5 percent from a 2012 peak of 15.1 percent, property prices have started to rebound and the government sees GDP growing by 2 percent this year.

Having peaked above 15 percent in 2011, yields on 10-year Irish bonds have dropped to about 3.4 percent - lower than rates of just over 3.9 percent for comparable debt from Spain and Italy, neither of which suffered the embarrassment of a sovereign bailout.

That suggests market confidence in Ireland's economy is relatively buoyant, though some investors are concerned about its national debt, which at 124 percent of GDP is among the highest in the EU.

The NTMA said in a statement it had picked Barclays (BARC.L), Citi Bank (C.N), Danske Bank (DANSKE.CO), Deutsche Bank (DBKGn.DE), Morgan Stanley (MS.N) and Davy Stockbrokers for a new ten-year euro benchmark transaction.

"Given the level of (10-year yield) where we're trading at the moment, it makes total sense for the NTMA to issue," said Fergal O'Leary of Glas Securities.

The NTMA said the bond would be issued in the near future, with several traders saying it was likely to come in the next day or two.

That would be slightly earlier than expected, after Finance Minister Michael Noonan said in December that Ireland would hold a sale of 10-year debt in late January or early February.

(Reporting by Conor Humphries; Editing by Sam Cage, John Stonestreet)

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