May 11, 2017 / 2:36 PM / 3 months ago

Irish debt agency 'not prisoners' to 2017 funding range

Cranes are seen along the skyline in the Irish Financial Services Centre in Dublin, Ireland April 24, 2017.Clodagh Kilcoyne

DUBLIN (Reuters) - Ireland's debt agency are "not prisoners" to plans to issue 9 to 13 billion euros (£7.6 billion to £11 billion) of debt this year with its minimum funding needs set to be met next month but a second syndicated sale in 2017 is unlikely, its head of funding said on Thursday.

Ireland, which has raised over 8 billion euros through bond sales and its first ever inflation-linked issue, won't stay out of the market in the second half so will likely at least end up somewhere between its stated funding range, Frank O'Connor told Reuters in an interview.

"If circumstances change and we feel we like markets and do something else so be it, we reserve that right. We have had a tradition of predicting the ranges reasonably well but we are not prisoners to the range," O'Connor said.

O'Connor said he saw that issuance continuing by auction rather than a larger placement via a syndicate of banks which is not in the agency's thoughts at present.

However he said there was a "high chance" that the National Treasury Management Agency (NTMA) would issue a new 10-year benchmark bond at the latest at some stage next year.

Options over the next couple of years may also include more inflation-linked bonds, O'Connor said, anticipating debt that could be tied to either domestic or euro zone inflation rates and develop into public issues of benchmark size, which for that line of funding would be around 1 billion euros, he said.

"We are not going to be in the position of countries like France where 10 or 11 percent of their debt is in inflation-linked bonds (but) investors on the road have said to us they are interested in Irish inflation-linked products," he said.

With Ireland's refinancing needs set to rise over the next three years, the NTMA could also offer holders of the debt maturing in that period the opportunity to switch into longer-dated bonds.

"The larger ones are the 19s (2019) and 20s (2020). Could I easily see us doing some formal switches later on? Yes I could but because of what we have done already we are in a flexible place," O'Connor said referring the fact that the NTMA has already cut the redemption requirement significantly.

One foray that is less likely is a debut dollar-denominated bond with U.S. investors increasingly looking elsewhere having been early buyers of Irish debt when Dublin returned to bond markets in 2012 following an international bailout.

"The amount of the American investors watching and wanting to play our credit has dissipated. It's not that they are negative on the credit but they like to go for more return," he said.

Reporting by Padraic Halpin and John Geddie; Editing by Toby Chopra

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