Ireland's National Treasury Management Agency, Dublin, could issue bonds with maturities of 25 years or longer as early as next month in an effort to help all — but predominantly corporate — Irish defined benefit funds manage their liabilities, according to several sources.
Anthony Linehan, deputy director for funding and debt management at the NTMA, said at a conference in Dublin on Tuesday organized by consultant Lane, Clark & Peacock that the government agency will issue long-dated bonds that can be used to give pension trustees “more options” in managing liabilities.
The bonds would be available on an ongoing basis, depending on demand, he said. “If we were to sell the bonds in tranches, then that would have to be at certain dates, and we prefer to let each group of trustees work according to their own timetable,” Mr. Linehan said at the conference.
The interest rate for the bonds is expected to be 6%, yielding about twice as much as the current 3% yields for German bunds, sources said. However, Irish 10-year government bonds are now yielding about 8% on the secondary market.
The move is part of the Sovereign Annuities Initiative announced by the Irish government in December and was first proposed by the Irish Association of Pension Funds and the Society of Actuaries in Ireland.