DUBLIN: Ireland raised 4 billion euros in a syndicated bond sale on Wednesday that will allow the government to replace some loans taken under its 2010 international bailout with debt raised at a negative interest rate.
Ireland announced last month it would seek early repayment of 5.5 billion euros ($6.5 billion) of bailout loans consisting of its outstanding debt to the International Monetary Fund (IMF), Denmark and Sweden, hoping to save around 150 million euros.
The deal, which attracted 10.1 billion euros of demand, closed at 24 basis points through mid-swaps, lead bankers on the deal told IFR, a Thomson Reuters publication.
That implies a slightly negative yield of around -0.012 percent, far below the 1.05 percent interest rate Ireland said its residual IMF loan balance carried last year.
Ireland has already repaid most of the 22.5 billion euros borrowed from the IMF as part of the 85 billion euro rescue package and has just 4.5 billion euros left. It owes 600 million euros to Sweden and 400 million to Denmark in bilateral loans.
Ireland, which has turned around its economy to make it the fastest growing economy in Europe for the last three years and on Wednesday maintained its forecast for GDP growth of 4.3 percent this year, has taken advantage of record low funding rates to issue debt at progressively lower cost.
The deal will also further alleviate pressure on Ireland's ability to access the European Central Bank's quantitative easing stimulus programme by increasing the pool of eligible debt that can be purchased and benefit from the programme.
Ireland will likely now have room for almost nine more months of ECB purchases at 500 million euros per month, up from just over seven months of headroom in August, Ryan McGrath, head of fixed income strategy at Cantor Fitzgerald, estimated.
Ireland had originally planned to issue 9 to 13 billion euros in long-term debt this year but has raised 14.5 billion via benchmark sales and a further 610 million in its first ever sale of inflation-linked bonds.
BNP Paribas, Citigroup, Davy, Goldman Sachs, NatWest Markets and Societe Generale are joint lead managers for the bond sale.
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