DUBLIN/LONDON, Jan 4 (Reuters/IFR) - Ireland launched its first ever 20-year bond on Wednesday in a syndicated sale that a source said could raise between 2 and 3 billion euros and cover up to a third of this year’s minimum funding needs.
It opened books on the benchmark issue at 50 to 55 basis points over mid-swaps, lead bankers on the deal said. That implies a yield of between 1.725 and 1.775 percent.
Ireland has kicked off its annual funding drive with a bond issue placed via a syndicate of banks in each of the last four years.
Smaller euro zone states often use syndication to broaden the investor base for their bonds and compete with big countries whose debt attracts demand because of its benchmark status. Using banks to find demand should also help secure more aggressive pricing and ensure liquid trading.
A market source told Reuters on Tuesday that the National Treasury Management Agency (NTMA) would seek to sell between 2 and 3 billion euros of the bond.
Ireland has taken advantage of record low funding rates over the last two years to issue longer-dated debt at progressively lower cost, stretching out the maturity of its stock of debt by selling 15-, 30- and a small amount of 100-year bonds.
The NTMA plans to issue between 9 billion and 13 billion euros of long-term debt in 2017, including at least one syndicated deal, in a slight increase on 2016.
The deal will also help alleviate the pressure on Ireland’s ability to access the European Central Bank’s quantitative easing stimulus programme by increasing the amount of eligible debt that can be purchased and benefit from the extension of QE.
The ECB last month cut its purchases of Irish bonds short of the level its rules dictate, data showed on Tuesday.
Barclays, Cantor Fitzgerald, Danske Bank, HSBC, J.P. Morgan and Morgan Stanley are joint lead managers for the bond sale.
Reporting by Padraic Halpin in Dublin and Michael Turner in London; Editing by Catherine Evans