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12.02.2014

Bank deal seen triggering new wave of demand for Irish debt

LONDON, Feb 8 (Reuters) Ireland appears to have delivered a big new signal to investors canada goose uk black friday with Thursday landmark plan to ease the burden of paying for its busted banking sector.

Investors see it helping Ireland sell new debt this uk canada goose outlet year, regain its funding independence and emerge as the first success story from the euro zone sovereign debt crisis.

All of which should feed into a fresh rally for paper that has already been doing well.

The Irish government struck a long awaited deal with the European Central Bank to Canada Goose sale switch a Canada Goose Online costly promissory note, used to pay for the rescue of failed Anglo Irish Bank, into less canadian goose jacket expensive sovereign debt.

By switching to lower interest rate bonds and stretching out the burden of repayments over four decades Ireland uk canada goose has saved itself 20 billion euros ($26.78 billion) over the next decade and freed up 1 billion euros for forthcoming budgets.

fiscal and financial situation of the Irish government has improved quite significantly after Canada Goose Outlet the agreement, said BNP Paribas rate strategist Patrick Jacq. the horizon has improved and this can speed up to some extent the return of Ireland canada goose store to the market.

Thursday deal Canada Goose Parka helped drive Irish funding costs to their lowest since before the start of the financial crisis in 2007 and further below those of euro zone peer Italy cagooseclearance canada goose clearance a country that canada goose uk shop regularly sells bonds and maintains buy canada goose jacket one of the most liquid debt markets Canada Goose Coats On Sale in the world.

Ireland 2017 bond currently yields 2.84 percent, compared with 3.26 Canada Goose online percent Canada Goose Jackets on an equivalent Italian bond.

The plan adds to the positive momentum Ireland has already built up, which helped it issue 2.5 billion euros of five year debt in January. The sale accounted for a quarter of the Irish debt agency 10 billion euro target for the year.

Unicredit told clients on Friday that a deal it had recommended on Irish 2019 bonds outperforming equivalent Spanish debt should now cheap Canada Goose bring greater profit that previously assumed. It expected the new Irish deal to add another 30 basis points difference between the yields.

10 YEAR TEST

Analysts said the Anglo Irish deal provided scope for a fresh rally in Irish bonds, buy canada goose jacket cheap adding to the extensive fall in yields seen since late July 2012 when the ECB announced a bond buying support plan for peripheral states.

Commerzbank strategist David Schnautz said longer dated Irish yield could fall another 50 basis points on the back of the deal.

So canada goose coats on sale the next test for Ireland is to canada goose uk outlet issue a new 10 year bond a popular maturity canada goose black friday sale with investors that is currently missing from canada goose coats Ireland after two years frozen out of the market.

view (Thursday deal as being strongly supportive of Irish government cheap canada goose uk bond yields going forward, and of the (debt agency wish to issue a syndicated 10 year bond in the near canada goose factory sale future, said Owen Callan, bond dealer at Danske Bank, a primary dealer in Irish government paper.

As part of the agreed debt swap Ireland will issue new government bonds worth 25 billion euros with maturities of between 25 and 40 years. These bonds will initially be held by the Irish central bank.

The terms of the deal stipulate these bonds will have to be slowly drip fed into the market, with a minimum of 500 million euros to be sold by the end of 2014, 500 million euros annually between 2015 and 2018 and increasing amounts from then on.

The Irish finance department said this would be done in an orderly fashion Cheap Canada Goose Parka canada goose clearance sale to avoid flooding investors with canada goose debt and market participants see the presence of ultra long term bonds in the market as another support for launching a new 10 year issue.

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