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Bidding for €1.5bn of state bonds reaches €5bn

THE monthly auction of government loans saw the National Treasury Management Agency (NTMA) receive offers totalling almost €5bn for the €1.5bn on offer.

The NTMA sold €500m of bonds due for repayment in 2014 and €1bn in 15-year bonds. Even this longer-term debt was over-subscribed three times.

"Today's result for the NTMA is again extremely impressive, underlying the increased international market confidence that Ireland, unlike some other euroland countries, is taking the right measures to address its public finances problem," Alan McQuaid, chief economist at Bloxham Stockbrokers, said.

With €6.5bn already raised, and €5bn carried over from last year, the NTMA has more than half the projected target funds it needs for 2010. "That is a situation which will be the envy of most of the other countries within the eurozone," Mr McQuaid said.

But he warned that Ireland and other "peripheral" eurozone countries could come under pressure if Greece's problems "snowball out of control".

"That could lead to a significant widening of bond yield spreads over Germany in the coming months. The NTMA has done its bit. The onus is now on the Government to do its bit, and continue with the correct fiscal austerity measures to tackle the Budget deficit."

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