Bloomberg News

Ireland Said to Plan for Sale of Amortizing Bonds Within a Week

August 20, 2012

Ireland’s National Treasury Management Agency plans to sell so-called amortizing bonds for the first time within a week, according to a person familiar with the matter.

The agency, based in Dublin, will issue less than 1 billion euros ($1.23 billion) of the securities, said the person, who declined to be named because a final decision hasn’t been taken. The sale will probably take place through a so-called tap mechanism, the person said. A spokesman for the agency declined to comment.

The NTMA said in a statement on its website today it will issue the debt, “subject to market conditions, in the near future,” after getting inquiries from investors. When issuing by tap, the agency will announce the bond to be sold and the size of the issue an hour before it’s offered, according to documentation published by the Dublin-based NTMA. It will then announce the price when the tap opens.

Irish pension funds may buy as much as 10 billion euros of sovereign annuity bonds within three years, according to Zurich Life Assurance Plc, the first insurer cleared by regulators to offer such products as the nation returns to debt markets.

A sovereign annuity is a contract where an insurance company pays a pensioner an annual income linked directly to the yields of bonds issued by a state. The sale of Irish annuity bonds has been facilitated by changes to the law last year. In the past, if the government that issued the bonds defaulted, the pension company would have to make the full payment. Under the new arrangement, part of the loss will passed on to the pensioner.

Irish debt is rated BBB+ by Standard & Poor’s and Fitch Ratings, seven levels below Germany’s AAA grade. The rate on Ireland’s 2020 bond fell three basis points to 6.03 percent today.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net


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