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Irish debt in demand from Asia, Mid East

Tuesday, February 11 14:00:47

There is growing interest in Ireland's debt from investors in the Middle East and Asia as it prepares to outline a series of auctions to raise funds for 2015, the head the National Treasury Management Agency said today.

Ireland, the first euro zone country to exit an EU/IMF bailout, made a strong return to bond markets with a 10-year issue last month and got a further boost when Moody's restored its investment grade credit rating.

The Government has already met its funding needs for 2014 and is aiming to raise 8 billion euros this year, nearly half which it has already garnered from January's bond, NTMA debt agency head John Corrigan said.

It will outline a schedule of auctions in the next week or so.

"Encouragingly we are seeing funds in the Middle East and Far East coming back into the market, which was our expectation as soon as we were restored to investment grade by all three rating agencies," Corrigan said at the Reuters Euro Zone Summit, a series of interviews with top policymakers across the region. "That is actually happening."

Corrigan said already foreign investors were snapping up about 80 percent of debt on offer and Ireland's raising of debt this year would be very modest.

"If you have a requirement of about 4 billion (euros) and the minimum size of an auction is about half a billion, that leaves you at most with capacity for eight auctions or possibly less, depending on the size of the auctions," he said.

Given the strong demand for Irish paper, which trades at about a 3.3 percent yield for 10 years versus 15 percent at the peak of the debt crisis in 2011, the NTMA has also looked at the issuing bonds with a longer maturity.

"What we got from our own contacts with the market and from the primary dealers was that while there would be reasonably good demand in the 20-year area, that the 10-year was an area where we could make a really big statement, where there was really huge demand," Corrigan said.

"I think it was important that we did that in the context of our exit."

Domestic demand is starting to pick up and complement strong exports but the Irish economy remains vulnerable to an external shock.

"Internally we are set fair to generate the required primary budget surplus that will move the debt/GDP ratio down," he said.

"I see the bigger threats coming from external factors - the withdrawal gradually over time of the monetary stimulus, particularly in the U.S., and whether that can be handled in an accident-free manner.

"The scope for accidents is clearly high."