Ireland plans to sell at least 3 billion euros ($4.1 billion) of 10-year bonds, marking its return to debt markets after exiting its international bailout last month, according to a person familiar with the matter.
The National Treasury Management Agency plans to allot the securities as soon as tomorrow, said the person, who wasn’t authorized to speak about it so asked not to be named. It hired Barclays Plc, Citigroup Inc., Danske Bank A/S, Davy, Deutsche Bank AG and Morgan Stanley today to manage the sale. David Clerkin, a spokesman for the NTMA, declined to comment on the planned size and timing of the bond issue.
“We anticipate significant demand and for the issuance to be well oversubscribed,” said Ryan McGrath, an analyst at Cantor Fitzgerald LP in Dublin. “Ireland’s significant cash balances mean it is fully funded into the first quarter of 2015.”
Ireland exited its rescue program on Dec. 15, becoming the first nation to do so since the euro region’s debt crisis erupted in 2009. It requested the 67.5 billion-euro bailout led by the European Union and International Monetary Fund in November 2010 when it was frozen out of bond markets as its banks came close to collapse.
Ireland’s 10-year bond yield fell two basis points, or 0.02 percentage point, to 3.35 percent today, and touched 3.33 percent, the lowest since January 2006. It’s down from a euro-era peak of more than 14 percent in July 2011, as the government reined in its budget deficit and real-estate prices began to stabilize under the bailout program.
The new bonds will probably be sold tomorrow and priced to yield 3.6 percent to 3.7 percent, according to McGrath at Cantor Fitzgerald. He had estimated that the NTMA would sell between 3 billion euros and 4 billion euros of bonds, compared with the debt agency’s full-year goal of between 5 billion euros and 10 billion euros.
Analysts at Glas Securities, the Dublin-based fixed-income firm, had predicted the NTMA would sell between 3 billion euros and 5 billion euros of debt, while UBS AG had estimated a 5 billion-euro issuance.
Ireland’s securities returned 108 percent since the nation’s 10-year yield rose to a record on July 15, 2011, according to Bloomberg World Bond Indexes. (BIRE) The nation reentered markets in July 2012 before selling additional debt last year under the umbrella of its aid program.
Ireland raised 5 billion euros in March 2013, when it sold its first 10-year bond since its bailout, exceeding an initial 3 billion-euro target at the time. Its 10-year borrowing costs are below those of Spain and Italy.
The announcement of the sale comes about a week before Moody’s Investors Service, alone among the four largest ratings firms with a non-investment grade stance on Ireland, is due to update its view on the country.
Finance Minister Michael Noonan said on Dec. 6 he hopes Moody’s will raise the nation’s credit ranking this year. The ratings firm cut its rating on the nation to non-investment grade, or junk, in July 2011 after Europe’s worst real-estate market collapse.
“Investors that buy into the new bond would benefit if there’s any improved tone from Moody’s on Jan. 17,” said Cathal O’Leary, head of fixed income at Investec Plc’s Irish unit in Dublin.
Irish home prices rose an annual 5.6 percent in November, the Central Statistics Office said on Dec. 23. They remain 47 percent lower than their 2007 peak. Commercial real-estate values increased for the first time in six years in the third quarter on increased demand for Dublin offices, Investment Property Databank Ltd. said on Oct. 24.
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