Ireland to raise 3.5bn euros from 20-year bond

DUBLIN: Ireland is set to raise 3.5 billion euros from the sale of a new 20-year bond on Thursday, according to memos from two lead managers seen by Reuters, the latest long-dated issuance from a euro zone sovereign.

That is slightly higher than the 2 to 3 billion euro target a source told Reuters about on Wednesday, with the deal receiving final investor demand of more than 35 billion euros.

The spread on the bond was set at 13 basis points over the mid-swap level, equating to a yield of around 0.60%, according to Reuters calculations.

Ireland has now raised 10.5 billion euros in 2021, more than half of which came via its first syndicated sale of the year, a 10-year deal investors piled into in January when the order book was in excess of 40 billion euros.

It plans to borrow 16-20 billion euros in 2021 to fund a huge increase in government spending to keep businesses and employees afloat during the COVID-19 pandemic.

This will lead to a budget deficit of 4.7% of gross domestic product (GDP) this year, the finance ministry forecast on Wednesday.

Thursday's issue is the longest dated sale Ireland has placed via a syndicate of banks in almost two years and follows hot on the heels of 50- and 15-year sales from Austria and Spain earlier this week.

Long-dated issuance has resurfaced after dying down in February when the bond sell-off driven by growth and inflation expectations hit longer-dated bonds particularly hard, as they are more sensitive to a rise in underlying rates. Bond yields move inversely with prices.

Ireland's National Treasury Management Agency mandated Barclays, BNP Paribas, Cantor Fitzgerald Ireland, Danske Bank, J.P. Morgan and Nomura as joint lead managers for the sale.

It is the first syndicated deal since the debt agency dropped Ireland's largest stockbroker, Davy Stockbrokers, as a primary dealer in Irish government bonds following a record central bank fine for breaching market rules.