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Last updated: January 8, 2013 12:14 pm
Ireland has raised €2.5bn through a bond sale, another major step towards economic and financial rehabilitation following Dublin’s eurozone bailout more than two years ago.
The National Treasury Management Agency increased the size of its existing 2017 bond through a “syndicated tap” of the security. The offer attracted about €7bn of orders, according to a dealer, allowing the debt office to raise €2.5bn. The yield was about 3.35 per cent.
Ireland last summer raised fresh money for the first time since its November 2010 bailout through a bond exchange but the successful tap represents another landmark for the country’s recovery, economists and fund managers said.
The deal “represents a Rubicon in terms of the country regaining full long-term market access”, Rabobank strategists said in a note.
The yield of the 2017 bond dipped 4 basis points to 3.22 per cent, down from the 5.72 per cent yield when the issue started trading last July, according to Bloomberg data.
Ireland’s benchmark 2020 bond yield also fell 4 bp to yield 4.26 per cent. This is close the low of 4.22 per cent touched on January 4, the lowest since early 2008 and down from a peak of almost 14 per cent in July 2011.
Owen Callan, a strategist at Danske Bank, said in the note that the tap “marks a massive step in Ireland’s long process of fully regaining long-term bond market access and fully normalising its primary market issuance”.
Dublin is expected to try to raise about €10bn this year as it attempts to extricate itself from a eurozone support programme by the end of 2013 and pre-fund money needed for next year’s budget deficit.
Ireland’s return to economic growth and a commitment to get its budget deficit under control since a debilitating banking crisis precipitated a November 2010 bailout has won it praise from fund managers and officials.
While the rest of Europe’s periphery saw economic contractions in the third quarter of last year, Ireland’s 0.2 per cent quarterly expansion was only bested by Germany among the big European economies, Capital Economics noted.
“Ireland’s recent performance remains head and shoulders above those of the other economies in the eurozone’s periphery and many in the core,” Jonathan Loynes, chief European economist at the consultancy and research house, said in a note.
Dublin is also on track to meet the 2012 budget deficit target of 8.6 per cent of gross domestic product after stronger than expected tax receipts
San Francisco-based Franklin Templeton, one of the biggest asset managers in the world, has been particularly impressed by Ireland’s performance and has piled into the Irish bond market over the past year.
By the end of the third quarter of 2012, the US asset manager held at least €8.4bn of Irish bonds, almost a 10th of the entire government bond market.
The Irish debt sale was managed by Barclays, Danske Bank, Davy, Royal Bank of Scotland and Société Générale.
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