June 25, 2019 / 10:41 AM / 3 months ago

Austria looks to place second "Century Bond" after mammoth debt rally

* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr

LONDON, June 25 (Reuters) - Austria is exploring the possibility of issuing a 100-year bond, alongside a new five-year, as it looks to take advantage of super low rates to lock in long-dated debt.

Austria has named lead managers to arrange a 3 billion euro five-year euro-denominated benchmark bond, and may add on a 100-year note subject to investor feedback, according to a lead manager.

Austria was the first euro zone sovereign to sell a so-called “century bond” publicly via syndication — where a borrower appoints banks to sell debt directly to investors — when it placed a 3.5 billion euro 100-year note in September 2017.

That bond was yielding 1.44% on Tuesday, having rallied almost 100 basis points since its issue date.

Belgium and Ireland have sold 100-year bonds in the past, but only through private placements, and for 50-100 million euros each.

The deal could also mark a rare negative-yielding syndication. Austria sells five-year syndicated debt with a negative yield. Austrian five-year bonds now trade at -0.44% having turned negative for the first time in October 2018 .

Austria has not escaped the strong rally which has swept through the euro zone government bond market and seen many bonds yields fall to record lows on the expectation of more monetary easing from the European Central Bank.

Austrian 10-year government bond yields fell below zero on June 18 after ECB President Mario Draghi opened the door to a new round of quantitative easing at a gathering of policy makers in Sintra, Portugal.

More than half of all euro zone government traded on the Tradeweb platform have negative yields, data showed last week.

Bank of America Merrill Lynch, Goldman Sachs, JP Morgan, Nomura and UniCredit are arranging the deal. The transaction is expected to be launched in the near future, the lead manager said.

Reporting by Virginia Furness and Abhinav Ramnarayan; Editing by Alison Williams

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