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Debt Crisis: Government succeeds in re-entering bond market with €3.5bn swap


Michael Noonan. Photo: PA

Michael Noonan. Photo: PA

Michael Noonan. Photo: PA

THE GOVERNMENT made its first return to the bond markets since September 2010 today as short-term borrowing costs fell.

The National Treasury Management Agency, which manages the State’s debt, swapped bonds due to be repaid in 2014 into new bonds due for repayment at the later date of 2015.

It managed to switch €3.5bn, or 30pc, of an €11.9bn bond due for payment in January 2014 for a new one maturing in February 2015.

The yield on the new bond is an average of 5.152pc.

“We are very pleased with the strong take-up of this switch offer,” a spokesman for the NTMA said.

“This exercise has demonstrated investor appetite for Irish government paper and will support our plans for a phased re-entry to long-term debt markets.”

Yesterday yields on Irish five year bonds fell below 6pc as talks on reducing the level of bank debt between Finance Minister Michael Noonan and senior European officials continued.

This compares with 18pc last summer.

"This offer is in response to approaches from market participants and will help address demand for Irish government paper maturing in 2015 that is currently unmet," the agency said.

Earlier, Minister for Finance have said that Ireland has no choice but to pay €1.25bn to Anglo Irish Bank bondholders today, as not doing so would cost the country more.

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He added that the European Central Bank had told Ireland all along that the consequences would be serious if we did not pay.

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