New research analyses alternative sources of funding

The Central Bank has today published an Economic Letter ‘Irish Non-Financial Corporations and the US Private Placement Market’.

This new research examines the use of an alternative source of funding, known as private placements, for Irish resident non-financial corporations (NFCs). Private placements are fixed rate bonds arranged privately between an issuer and an institutional investor. The US private placement market is traditionally the primary market for Irish NFCs.

The research found that:

• Data indicate that since 2003 there have been an estimated 39 deals involving 22 Irish NFCs.
• As of Q2 2014, we estimate that the total amount outstanding stood at $10.4 billion with new issuance exceeding $1 billion per annum in recent years.
• Bank deleveraging, combined with more stringent lending conditions, has seen a sharp reduction in bank funding to this sector and an increased interest in direct lending from non-bank institutions to NFCs.
• Issuers are generally blue chip Irish NFCs, with a strong export dimension to their operations.

This letter provides information on a significant source of funding for Irish NFCs that has not been covered, to date, in our published Securities Issues Statistics.