Pension funds may buy €10bn of bonds

Irish pension funds may buy as much as €10bn of domestic sovereign annuity bonds within three years, according to Zurich Life Assurance Plc, the first insurer cleared by regulators to offer such products as the country returns to debt markets.

Zurich Life, a Dublin-based unit of Zurich Insurance Group AG, was granted approval last month to offer Irish sovereign annuity bonds, according to the Pensions Board. The National Treasury Management Agency, working on a phased return to capital markets, plans to sell annuity bonds of between 15 and 35 years in maturity, according to documents published Jul 19.

“Over the next three years or so, I think there’ll be demand across the industry in Ireland for between €3bn and €10bn of sovereign annuity bonds,” Brendan Johnston, pensions director at Zurich Life, said. The NTMA may seek initial demand for about €100m of such bonds before it starts issuing in the coming months, he said.