THE market is expecting Bank of Ireland (BoI) to forge ahead with a €1bn-plus bond programme over the coming months to take advantage of a "window of opportunity" created last week.
The National Treasury Management Agency (NTMA) has decided not to issue any more Irish government bonds until 2011, reflecting the massive premium demanded for government debt.
Market sources say this decision could create an opportunity for Irish banks to raise so-called 'term debt', or facilities for longer than one year, before the end of the year.
"If the sovereign does address its fiscal case, and then doesn't come to the market until 2011, there may be a small window of opportunity there for the banks to issue government guaranteed bonds," said Jim Ryan of Glas Securities.
He added that the bond market issues could "very well be addressed" by the four-year budget plan to be delivered by the Finance Minister Brian Lenihan in November.
Other sources pointed out that the banks would be well-positioned to capitalise on any positive Irish sentiment that emerged while the sovereign wasn't issuing new debt.
"If investors want to buy into Ireland and the sovereign isn't issuing, then they'll look to the banks' programmes," said one market source.
BoI is seen as the most likely first mover, since it was reportedly set to pull the trigger on a €1bn fundraising before the cost of Irish debt ballooned in September.
An imminent fundraising is thought unlikely, but several sources expect the bank to issue bonds over the coming months.
The issue is likely to be for more than €1bn, with terms of between one year and five years.
Sources pointed out, however, that it was naive to think that last week's announcements on the cost of the bank bailouts and the restructuring of the sector would automatically clear the way for fundraisings.
Others pointed out that it might be even harder for banks to issue funding if the Government wasn't also selling bonds.
"Usually the bank makes its case and the Ntma makes the case for the sovereign; with the Ntma out of the market, the bank will have to make both cases," said one source.
A spokesman for BoI declined to comment.