Tuesday 27 June 2017

Government raises €1bn in under-pressure bond markets but investor appetitive fading

NTMA Chief Executive Conor O Kelly
NTMA Chief Executive Conor O Kelly
Donal O'Donovan

Donal O'Donovan

The Irish government has borrowed €1bn on the markets at an interest rate of less than 1pc, but with strong indications investor appetite is fading.

The National Treasury Management Agency (NTMA) completed an auction of €1bn of 10-year Irish Government bonds carrying a 1pc coupon or annual interest rate. The bonds priced at a premium so the true interest rate works out at 0.99pc

Total bids received from investor at the auction amounted to €1.8bn or 1.8 times the amount on offer. That is far below recent deals, which had been heavily oversubscribed by multiples of the amount of bonds available.

After a period that had seen Irish borrowing costs move closer to those of so called core European nations like France and Germany, the process is now beginning to reverse.

The difference between Irish and French borrowing costs over 10 years has more than doubled since the start of the year.

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