In the first test case of a major sovereign syndication under sweeping new financial market rules, Ireland's debt agency said the process went relatively smoothly, soothing concerns that the new regulations could prove disruptive to bond transactions. Ireland was the first euro zone sovereign issuer out of the traps this year when it raised 4 billion euros in a new 10-year bond on Wednesday, the same day the wide-ranging European Union financial reforms took effect.
The new regime, known as MiFID II or Markets in Financial Instruments Directive I, shines a spotlight on the innards of stock, bond, commodity and derivatives markets by forcing banks, asset managers and traders to report detailed information on trillions of euros in transactions. "I would say there was some small change," Frank O'Connor, the head of funding at Ireland's National Treasury Management Agency (NTMA), told a conference call.
"Under MiFID II, sovereigns tend to be more exempt than other market participants. Notwithstanding that, the primary dealers and the people who are involved in the sales process have obligations to the end client." O'Connor said the changes were limited to some additional documentation, for example, having to include an extra line in its announcement of the deal on Tuesday stating that its target market for the bonds were eligible counterparties, professional clients and retail clients "as defined in MiFID II".
The syndicate of banks and brokers mandated by the NTMA to sell the bond were also now obliged to provide the debt agency with an overarching guidance of the allocation in writing which it then had to approve, he said. The rollout of the new rules has been glitch-free so far, though disruptions cannot be ruled out, the EU's markets watchdog said.
"It's very small to the eyes of some, but that's a change," O'Connor said, referring to one of the tweaks. "In terms of the underlying for us, there was no change, I would say at the margin just a little more documentation."
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