DUBLIN/LONDON: Ireland made a storming return to the international bond market yesterday, with bumper demand for the country’s first debt sale since exiting its EU/IMF bailout helping to drive down yields across the euro zone’s periphery.
Investors bid more than ¤14bn ($19bn) for the new 10-year bond sold via syndication, nearly four times the size of the final ¤3.75bn issue, the country’s NTMA debt agency said.
The bond — the first Dublin has sold since last March — was priced at mid-swaps plus 140 basis points, giving a yield of just over 3.5 percent, and marked a substantial step towards a target of raising ¤6-10bn this year.
“This sale shows that Ireland has fully exited the EU/IMF (bailout),” Finance Minister Michael Noonan said in a statement.
“The yield of 3.54 percent illustrates the strength of Ireland’s international reputation and brings us far closer to the borrowing rates of the strongest European economies.”
Ireland’s cost of borrowing over 10 years has tumbled from a peak of about 15 percent, hit in 2011 as the euro zone’s debt crisis intensified.
A test of market confidence in Ireland’s recovering economy, which grew 1.7 percent year on year in the three months to September, the sale also sets a benchmark for Greece, Portugal and Cyprus, the euro zone states still under sovereign bailout programmes.
“Such extremely heavy demand reinforces the recent positive sentiment towards Ireland,” said Ryan McGrath, a Dublin-based bond dealer with Cantor Fitzgerald. “This bodes well for upcoming issuance by other euro zone peripheral countries.”
Yields on Spain’s 10-year benchmark bond fell nearly 10 basis points to 3.81 percent, while their Greek equivalent fell by 37 basis points.
“The deal has attracted a lot of international interest, and with many of those orders unable to be filled, these investors have had to look elsewhere,” said Dan Shane, head of SSA syndicate at Morgan Stanley, one of the banks leading the deal.
Smaller euro zone states sometimes place bonds via a syndicate of banks as doing so helps them to reach a broader range of investors than through a traditional auction.
Ireland formally exited its 85 billion euro bailout on December 15, having sought the rescue in 2010 after a burst property bubble crippled the country’s banks and blew a hole in the public finances.
Reuters
