Home > Financial > Ireland sells €4bn euros of debut 20-year bond

Ireland sells €4bn euros of debut 20-year bond

Written by Business World, on 4th Jan 2017. Posted in Financial

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Ireland raised 4 billion euros at its first-ever 20-year bond sale on Wednesday, drawing more than twice as much demand in a syndicated deal that covered over a third of its minimum funding needs for the year.

It sold the benchmark bond at 50 basis points over mid-swaps, a spokesman for the country's debt agency said, implying a yield of 1.725%. Investors bid 10.75 billion euros.

It is the fifth year in succession that Ireland, the euro zone's fastest-growing economy, has begun its annual funding drive with a bond issue placed via a syndicate of banks.

Smaller euro zone states often use syndication to broaden the investor base for their bonds and compete with big countries whose debt attracts demand because of its benchmark status. Using banks to find demand should also help secure more aggressive pricing and ensure liquid trading.

Ireland has taken advantage of record low funding rates over the last two years to issue longer-dated debt at progressively lower cost, stretching out the maturity of its stock of debt by selling 15-, 30- and a few 100-year bonds.

The NTMA plans to issue between 9 billion and 13 billion euros of long-term debt in 2017, including at least one syndicated deal, in a slight increase on 2016.

The deal will also help alleviate the pressure on Ireland's ability to access the European Central Bank's quantitative easing stimulus programme by increasing the amount of eligible debt that can be purchased and benefit from the extension of QE.

The ECB last month cut its purchases of Irish bonds short of the level its rules dictate, data showed on Tuesday.

Barclays, Cantor Fitzgerald, Danske Bank, HSBC, J.P. Morgan and Morgan Stanley are joint lead managers for the bond sale. (Reuters)

Source: www.businessworld.ie

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