Tuesday 23 May 2017

Irish bond sale raises €1.5bn at auction

Dara Doyle and Louisa Fahy

The National Treasury Management Agency has sold €1.5bn of bonds in an auction, the first since the Government detailed its plans to bail out the country’s banks.

Investors bid for three times the 2016 and 2020 securities offered, the NTMA said today.

It sold €750m of 4.6pc debt maturing in 2016 to yield an average 3.663pc and €750m of 5pc debt maturing in 2020 to yield 4.688pc.

Irish banks need €32bn in new capital, some of which will have to come from the state, Finance Minister Brian Lenihan said on March 31.

Still, the premium investors charge to hold Irish debt has fallen in the last year as the Government cuts spending to rein in its budget deficit.

That’s set it apart from Greece, where the debt premium has soared on concern it won’t be able to meet its debt payments.

“The NTMA should be happy with this result,” said Fergal O’Leary of Dublin-based Glas Securities Ltd, which specialises in fixed-income markets.

“This is a good outcome given the nervousness in peripheral bond markets in recent days.”

The difference in yield, or spread, between 10-year Irish securities and 10-year German bunds, the euro-region’s benchmark government securities, narrowed to 146 basis points today from 153 yesterday.

The spread between Greek 10-year bonds and bunds rose to as much as 472 basis points, the most since Bloomberg records began in 1998.

Ireland’s budget gap widened to 11.7pc of gross domestic product in 2009, almost four times the European Union limit. Greece’s deficit was 12.9pc of GDP.

The treasury agency has now raised 59pc of its planned €20bn 2010 bond issuance program, it said in an emailed statement.

Its next auction is scheduled for May 18.

Bloomberg

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