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Auction to ease 2016 Irish debt needs

Tuesday, July 01 15:00:06

Ireland will seek to ease its funding requirements for 2016 by offering investors the chance to swap a bond due for repayment in two years time with longer-dated debt, the NTMA said today.

Ireland, which emerged from an EU/IMF bailout last year, is fully funded for 2014 and said it will also hold a bond auction next week having already raised over 70 percent of the 8 billion euros earmarked to fully pre-fund for 2015.

The debt agency said it will offer buyback and switch terms to holders of its April 2016 bond "in the near future". That would cut the 10 billion euros of bonds scheduled to be redeemed that year versus the 7 billion outstanding in 2017.

Ireland began hacking away at its once hefty post-bailout funding requirements by launching a bond switch in its first return to the debt markets in January 2012 and followed up with a second switch later that year.

Other peripheral euro zone countries have also used bond switches to trim future funding needs, most recently Spain which last month swapped expensive debt issued at the height of the euro zone crisis for a new 10-year bond.

Next week's bond auction, which will be held on Thursday, will be the only one held between now and the end of September, the National Treasury Management Agency said in a statement.

A sale of 10-year paper in March was Ireland's first bond auction since it was locked out of the market in September 2010 and it has continued to raise funds at record low yields this year.

The head of funding at the NTMA was quoted as saying on Sunday that Ireland plans to sell between 8 billion and 10 billion euros of long-term bonds in 2015, starting with a syndicated issue early in the year.

The debt agency also plans to hold a treasury bill auction on Sept. 18. (Reuters)