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UPDATE 2-Ireland eyes 2 bln euros in first fundraising of 2013
January 7, 2013 / 4:41 PM / 5 years ago

UPDATE 2-Ireland eyes 2 bln euros in first fundraising of 2013

* Syndicated sale of 2017 bonds likely in coming days -source

* Ireland aiming to raise around 10 bln euros this year

* 2017 bond first sold in July, trading well below initial yield

By Padraic Halpin

DUBLIN, Jan 7 (Reuters) - Ireland will offer around 2 billion euros ($2.6 billion) of bonds this week in its first debt sale of 2013, reopening a 2017 bond first sold in July as the country raises funds ahead of a planned exit from its bailout.

The country’s debt agency said on Monday it planned a syndicated tap of the 2017 bond, the initial 3.8 billion euro sale of which marked Ireland’s return to the long-dated market following the November 2010 rescue package.

A source familiar with the deal said the sale would be sized at around 2 billion euros.

“They’re looking at approximately 2 billion and it’s expected to happen in the next couple of days,” the source told Reuters on Monday.

Ireland began to smooth the path towards exiting its EU/IMF bailout last year, when it took advantage of a sharp fall in bond yields by launching two bond swaps, a maiden amortising bond issue and new long-term debt sales.

This sliced 10 billion euros off its post-bailout funding needs and the National Treasury Management Agency (NTMA) has said it wants to raise another 10 billion euros this year to cover the country’s 2014 funding requirements.

In July, it sold the 2017 paper at a yield of 5.9 percent but Irish debt has performed strongly since, passing Spain to trade closer to Italy, two struggling countries who have not sought a sovereign bailout.

The 2017 bond traded at a yield of 3.25 percent before the NTMA’s announcement and rose to 3.35 percent, according to Tradeweb data, as markets adjusted to the likelihood that Ireland would have to give up around 10 basis points as is typical with most new issues.

“Prior to entering the EU/IMF aid programme, the average cost of bond funding was circa 4.7 percent, so issuing at a yield significantly below this level is clearly extremely positive for Ireland as it hopes to fully emerge from the (bailout) programme by the end of the year,” Dublin-based Glas Securities said in a note.

The NTMA mandated Barclays, Royal Bank of Scotland , Danske Bank, Societe Generale and Dublin-based Davy Stockbrokers as joint lead managers for the transaction.

Smaller euro zone states sometimes place bonds via a syndicate of banks as doing so helps them to reach a broader range of investors than through a traditional auction.

With Ireland’s bailout scheduled to finish at the end of the year and the NTMA hoping to return to regular monthly bond auctions before then, bond dealers said a successful syndicated issue would put them well ahead of target.

“I suspect that demand will be pretty high and maybe they might go for higher (than 2 billion),” said Owen Callan, a dealer at Danske, one of the lead managers.

“This would get 15 or 20 percent of fund raising out of the way on week one which would be a nice way to start the year. They’re ahead of the curve and that’s what they’ve been doing over the last six or nine months.”

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