RPT-EURO DEBT SUPPLY-Ireland in first bond auction in three years

Mon Mar 10, 2014 2:30am EDT

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By Emelia Sithole-Matarise

LONDON, March 7 (Reuters) - Ireland will be the main market focus in the primary euro zone debt market in the coming week with launch of its first bond auction since its 2010 international bailout.

The first euro zone country to exit a European Union/International Monetary Fund bailout, Ireland said last month it was aiming to sell 500 million to 1 billion euros in bonds at the auctions.

The National Treasury Management Agency (NTMA) is expected to announce on Monday the maturity of paper it will offer at Thursday's auction.

Some analysts expect it to sell its March 2024 bond to boost liquidity in the paper which was issued via a syndication of banks in January to bumper demand.

"We expect a smooth auction. It will be the icing on the cake for Ireland in terms of getting back to a more normal primary bond market set-up," said David Schnautz, a strategist at Commerzbank.

"The market will take it as a buying opportunity and so I don't expect much (price) concession."

Irish bonds, like debt issued by other lower-rated euro zone states, has been in demand from foreign investors in recent months and now 10-year paper yields just over 3 percent , compared with 15 percent at the peak of the debt crisis in 2011.

Portugal, the third country to take a bailout after Greece and Ireland, is also looking at resuming bond auctions this year, possibly before its EU/IMF aid programme ends in May.

RBS strategists, however, said given that auctions were not necessary for Lisbon for Lisbon to exit the bailout and that it has already met its 2014 funding requirements and was now looking to pre-fund for 2015, such sales were not imminent.

"In fact a limited stock of tradeable bonds in a strongly trending market is only likely to exacerbate the positive price action and store up demand for the next large issuance," they said in a note.

Next week, Germany will sell up to 4 billion euros of two-year bonds on Wednesday while Italy will sell medium- to long-term bonds on Thursday. The Italian Treasury will announce on Monday the amount and maturities it aims to sell.

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