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A statue of author James Joyce overlooks shoppers on Dublin's North Earl Street. Ireland’s government will on Thursday re-enter the bond market, the first time since September, 2010. (Shawn Pogatchnik/AP)
A statue of author James Joyce overlooks shoppers on Dublin's North Earl Street. Ireland’s government will on Thursday re-enter the bond market, the first time since September, 2010. (Shawn Pogatchnik/AP)

Dublin poised for return to debt market Add to ...

Dublin will return to international debt markets on Thursday for the first time since it was forced into a European Union and International Monetary Fund bailout when it holds an auction for three-month treasury bills.

Ireland’s National Treasury Management Agency said on Tuesday it would sell €500-million ($630-million U.S.) worth of bills maturing on Oct. 15 in the first debt auction it has held since September, 2010.

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“The resumption of treasury-bill auctions follows an intensive engagement with investors both domestically and overseas during the past 18 months and marks an important first step in our phased re-entry to the capital markets,” said John Corrigan, NTMA chief executive.

Conall MacCoille, chief economist at Dublin-based Davy Stockbrokers, said Ireland’s re-entry into the treasury bill market has been planned by the NTMA for many months.

“There has been ample appetite for Irish T-bill issuance for some time, so today’s announcement is no surprise to bond markets.”

“The surprise for investors has been new issuance hasn’t already occurred. The delay most likely reflects caution by the NTMA, given renewed tension in European bond markets in recent weeks,” said Mr. MacCoille.

The agency is taking advantage of growing investor confidence in the country prompted by last week’s European summit deal, which paved the way for Europe’s new bailout fund, the European Stability Mechanism (ESM), to invest directly in banks.

Yields on Ireland’s benchmark nine-year bonds fell below those of Spain on Friday following the agreement, which Dublin hopes will enable it to restructure some of its bank debt.

Dublin has so far pumped €64-billion into its banks in what ranks as one of the world’s worst-ever financial crises. The Irish government is pushing to have as much of this debt shifted from the shoulders of Irish to European taxpayers by attracting new funds from the ESM. It hopes this type of financial restructuring could reduce its national debt from about 117 per cent of gross domestic product in 2013, to below 100 per cent of GDP, making it more attractive to investors.

Dublin is scheduled to exit its €67.5-billion EU-IMF bailout program at the end of 2013 and needs to begin raising funds this year to cover an €8.3-billion bond payment due in January, 2014, and its budget deficit. The issuing of treasury bills is the first step in a phased re-entry to international bonds markets planned by the NTMA over the coming months.

The agency has met more than 200 investors over the past year on roadshows in the US, Asia and Europe aiming to rebuild confidence in the Irish economy. The NTMA is expected to launch a syndicated bond issue later this year or early next year, although this will depend on wider investor sentiment to the euro zone.

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