Ireland is coming under further pressure on the bond market as concerns persist about slowing growth, the cost of Anglo Irish and whether the country can get its outsized deficit under control.
The NTMA auctioned off €400m of short-term treasury bills, but this was €100m less than it originally intended to sell.
While there was strong demand, the NTMA decided not to auction off the entire amount after taking account of the prices sought by investors.
Meanwhile, other investors in the market were selling Irish 10-year bonds, pushing up the yield 15 basis points to 6.33pc, leaving Ireland facing the highest future borrowing costs in the eurozone, apart from Greece. Portugal, also on an austerity drive, had a yield of approximately 6.1pc for 10-year money.
In the NTMA auction, some €300m of bills due on February 14, 2011, were sold at a yield of 1.907pc, compared with 1.925pc at a sale on September 9. The NTMA also sold €100m of bills maturing April 18, 2011, at an average yield of 2.231pc, up from 2.19pc at the previous sale.
Sign of stress
The biggest sign of stress for Ireland during the day was on the credit default swap (CDS) market. The CDS market measures the cost of insuring government bonds. The cost of insuring five-year Irish sovereign bonds rose to 483.3 basis points from 464.2 on Wednesday. This meant that to insure $10m (€7.49m) worth of Irish five-year bonds would cost an investor $461,000.
The latest CSO figures on the economy were also cited by traders as a reason for the bond sell-off. The figures showed that in the second quarter GNP dropped by 0.3pc, with GDP down 1.2pc, prompting fears of a double dip recession.
The other trend being watched closely was the cost of insuring Anglo Irish bonds, also measured in the volatile CDS market.
Investors there now fear that not only subordinated bonds, but even senior bonds, mightn't ultimately be honoured by the Government. This has been furiously denied by Finance Minister Brian Lenihan.
The cost of insuring Anglo Irish senior bonds surged yesterday to 818.73 basis points, an elevated level for a bank which benefits from a government guarantee for most of its liabilities.
Meanwhile, the IMF reiterated once again that Ireland has not applied for any funding. The organisation's spokeswoman said Ireland was taking "appropriate" fiscal measures.
"There have been no requests for financing support or any special request to the IMF," Caroline Atkinson, the institution' s director of external relations, said when asked about Portugal and Ireland," she stated.
"We do believe that the fiscal measures that the Government has announced and is implementing and discussing in its Budget are appropriate and the right thing to do given the financing and fiscal pressures in Ireland."
Governments in Europe need to both implement the fiscal tightening plans that they have announced and introduce measures to boost growth in coming years, Ms Atkinson said.