UPDATE 2-Ireland raises 6 billion euros in largest bond sale in a decade

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(Adds quotes and confirmed yield)

By Conor Humphries and Yoruk Bahceli

DUBLIN/LONDON, April 7 (Reuters) – Ireland’s debt agency raised 6 billion euros ($6.5 billion) on Tuesday in its largest bond sale for a decade, as the state moved to boost its finances in the face of what the deputy prime minister said would be “significant deficits” caused by the coronavirus pandemic.

The National Treasury Management agency raised the funds through the syndicated sale of a new seven-year bond, which it said attracted 33 billion euros worth of demand.

The issue was priced at mid-swaps plus 32 basis points, which the NTMA said represented a yield of 0.242%. Before the transaction, a market source said the NTMA had hoped to raise between 3 billion and 4 billion euros.

“This demand highlights the progress Ireland has made in recent years to improve its sovereign credit rating and its debt sustainability,” the NTMA’s chief executive Conor O’Kelly said in a statement.

“While the economic challenges arising from Covid-19 are significant, Ireland is well-positioned to meet any additional borrowing requirements.”

The issue means Ireland has raised 11 billion euros of a target for the year, set before the coronavirus pandemic, of 10 to 14 billion euros.

The NTMA has not updated that target despite a surge of government spending to help deal with the effects of the coronavirus, which the central bank has estimated will cost at least 8 billion euros.

Last week, the NTMA said it would have one syndicated issue and two bond auctions between April and June, its busiest quarter of issuance in more than two years.

It said it was well-placed to address any borrowing challenges caused by the pandemic, citing strong cash balances, investor appetite and European Central Bank measures.

Ireland mandated BNP Paribas, BofA Securities, Cantor Fitzgerald Ireland, Danske Bank, Goldman Sachs International Bank and J.P. Morgan as joint lead managers of Tuesday’s sale, the National Treasury Management said.

“People see good value in Ireland versus some of the other sovereigns,” said a banker who worked on the deal.

German government bond yields rose on Tuesday, when euro zone finance ministers were due to meet to discuss a joint response to help member countries deal with the economic impact of the novel coronavirus.

Demand for safe-haven Bunds has softened in recent days as the number of new cases and the increase in the death toll has slowed in several countries, including Italy and Spain, the worst hit so far.

For 10-year debt, Ireland offers around 60 bps on top of German debt of the same tenor to its investors.

Irish Deputy Prime Minister Simon Coveney said on Tuesday he expected Ireland’s economy to begin to recover from the pandemic later in the summer, but he warned Ireland would have to borrow a lot of money and run significant deficits for a period.

$1 = 0.9195 euros
Reporting by Conor Humphries in London and Yoruk Bahceli in
London
editing by Catherine Evans, David Holmes and Larry King

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