UPDATE 2-Ireland hopes for monthly bond sales from 2013

Thu Nov 22, 2012 10:05am EST

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* To send signal soon on syndicated bond issue

* Hopes to return to regular monthly auctions next year

By Conor Humphries

DUBLIN, Nov 22 (Reuters) - Ireland hopes to begin regular monthly bond auctions next year as it prepares to exit its EU-IMF bailout and plans a syndicated bond sale soon, the head of the country's debt agency said on Thursday.

A banking crisis caused when a gigantic property bubble burst left Ireland locked out of capital markets two years ago and forced the state to seek international aid. Irish banks are still dependent for funding on the European Central Bank.

Dublin has made a limited return to debt markets in recent months as it prepares for an end to official funding in December next year, but has not issued a new benchmark 10-year bond or begun regular debt auctions.

The country's debt chief John Corrigan told a parliamentary committee on Thursday that Ireland would return to selling government bonds on a monthly basis, as most European countries do, "hopefully in 2013".

He also said he aimed to "send a signal to the market as soon as possible" about plans for a syndicated bond issue of five years or more. 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.

"Coming into 2013, if we are to have a good visibility on our funding for 2014, we believe that we probably have to (undertake), in very round terms, in the order of 10 billion (euros) in bond issuance in 2013," Corrigan said.

Debt issuance in recent months has allowed the agency to cut a 12 billion euro funding cliff that loomed just after the country's planned exit from its rescue package in December next year to 2.4 billion euros.

The debt agency has said it is confident it can attract the necessary funds to avoid a second bailout.

But the government believes it can only make a full market return at sustainable rates if it gets a deal on its legacy bank debt, which has helped push state borrowing towards 120 percent of gross domestic product.

Dublin is lobbying the ECB to restructure 31 billion euros in promissory notes used to recapitalise the former Anglo Irish Bank, now called the Irish Bank Resolution Corporation.

Corrigan said he was cautious about promising investors that a deal on the notes, which could provide "important relief" to Ireland's funding needs, would be secured.

"Our whole approach to investors has been ... hopefully to over-deliver and under-promise rather than the other way around," he said.

Asked about U.S. asset manager Franklin Templeton's holding of around 8.3 billion euros ($10.6 billion) of Irish paper, nearly one tenth of a highly illiquid market, Corrigan welcomed its support but said Ireland needed to widen its investor base.

"As an investor, Franklin Templeton are clearly very welcome in the positive view they have taken on the Irish market," Corrigan said.

"We would prefer if we had 10 Franklin Templetons rather than one."

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