The National Treasury Management Agency has announced details its of Government bond exchange programme, which aims to make the Government debt more attractive to investors. The programme starts on May 11th when the agency will announce the terms by which investors can switch out of old stocks and into new ones.
The agency hopes the new bonds, without the tax problems and lack of liquidity attaching to the old-style stock, will encourage investment.
The new bonds will be identical to benchmark stocks across Europe and will be available in four different time periods.
Current investors in Irish bonds will be allowed to switch into bonds which will mature in 2002, 2005, 2010 and 2016.
The first phase will begin with terms being offered for the 2010 issue and 2016. A week later, the agency will announce terms for the 2005 and 2010 again, with the terms for 2002 being posted on May 24th.
The short timetable will be welcomed by investment managers who lobbied against significant amounts of time between the issues, which could have left them exposed in the event of a market "shock".
Mr Oliver Mangan, bond economist at AIB, said the new terms should encourage investors from Germany, Italy, France and Holland to invest in Irish Government debt as Irish institutions switch out of it.
Irish institutions, which hold about 70 per cent of the debt, are expected to sell off large parts of it as they diversify by buying into the debt of other European countries.
"The focus will be very much on the five-year and 10-year, as it is in Europe," Mr Mangan said.
He added that the high credit rating of Irish debt, as well as these larger, more liquid issues, will make it easier for international funds to buy bigger amounts than they would have in the past.
Taxation problems were dealt with by changes in the recent Finance Bill.
The NTMA has not yet announced at what prices the different stocks will be available, although it insists that the prices will be competitive and "close to par".
The prices will not be decided until the day of issue, when they will be compared to a range of similar European stocks, according to Mr Mangan.
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