October 4, 2017 / 8:06 AM / a year ago

Ireland kicks off 5-year bond sale to replace bailout funds

DUBLIN, Oct 4 (Reuters/IFR) - Ireland launched a five-year syndicated bond sale on Wednesday that could raise up to 5 billion euros and replace some loans taken under its 2010 international bailout, with debt raised at near zero percent interest rates.

Ireland said last month it would seek early repayment of 5.5 billion euros ($6.5 billion) of bailout loans consisting of its outstanding debt to the International Monetary Fund (IMF), Denmark and Sweden, hoping to save around 150 million euros.

Books opened on the benchmark issue at low 20s basis points through mid-swaps, lead bankers on the deal said. That implies a yield marginally over 0 percent, far below the 1.05 percent interest rate Ireland said its residual IMF loan balance carried last year.

Ireland has already repaid most of the 22.5 billion euros borrowed from the IMF as part of the 85 billion euros rescue package and has just 4.5 billion euros left. It owes 600 million euros to Sweden and 400 million to Denmark in bilateral loans.

A market source told Reuters on Monday that the National Treasury Management Agency (NTMA) would seek to sell between 3 and 5 billion euros of the bond.

Ireland, which has turned around its economy to make it the fastest growing economy in Europe for the last three years, has taken advantage of record low funding rates to issue debt at progressively lower cost.

The deal will also further alleviate pressure on Ireland’s ability to access the European Central Bank’s quantitative easing stimulus by increasing the shrinking pool of eligible debt that can be purchased and benefit from the programme.

Ireland had originally planned to issue 9 to 13 billion euros in long-term debt this year but has already raised 10.5 billion via benchmark sales and a further 610 million in its first ever sale of inflation-linked bonds.

BNP Paribas, Citigroup, Davy, Goldman Sachs, NatWest Markets and Societe Generale are joint lead managers for the bond sale.

$1 = 0.8506 euros Reporting by Padraic Halpin in Dublin, Julian Baker and Helene Durard in London; editing by John Stonestreet

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