January 7, 2014 / 9:31 AM / 4 years ago

UPDATE 1-Investors scramble for Ireland's first post-bailout bond

By John Geddie

LONDON, Jan 7 (IFR) - Investors are frantically trying to get hold of Ireland’s first debt sale since it exited its EU/IMF bailout programme late last year, with initial interest exceeding EUR9bn, market sources said on Tuesday.

Even before initial price thoughts were released for Ireland’s sale of the new 10-year bond on Tuesday morning, traders were making prices for brokers in the ‘grey market’ to satisfy demand from investors who felt they were unlikely to get the allocations they wanted in the debt sale.

Lead managers - Barclays, Citi, Danske, Davy, Deutsche Bank and Morgan Stanley - later released initial price thoughts of mid-swaps plus 150bp area, but quickly revised guidance tighter after interest topped EUR9bn, including EUR1.5bn from Ireland’s primary dealers.

Ireland, rated Ba1/BBB+/BBB+, set price guidance at mid-swaps plus 145bp area on the new March 2024 bond, and later fixed the spread at mid-swaps plus 140bp just before books were set to close at 0930GMT.

The deal will price later on Tuesday, and at current market rates is set to offer a yield of just above 3.5%, flat to Ireland’s secondary curve.

The Irish debt agency has given no indication of the size of the issue, but a source familiar with the transaction told Reuters on Monday that guidance was for around EUR3bn.

Irish yields have fallen steadily from peaks above 15% in 2011, and last year dropped lower than those of Spain and Italy, neither of which have suffered the embarrassment of a sovereign bailout.

The sale will be Dublin’s first bond issue since March 2013, when it sold EUR5bn 10-year transaction, and is seen as a bellwether both for investor confidence in Ireland’s ability to go it alone after it successfully exited its bailout in December, and market appetite for the debt of other countries in Europe’s periphery.

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