Saturday 17 March 2018

Ireland borrowing costs drop to 11-month low

Brian Hayes. Photo: Tom Burke
Brian Hayes. Photo: Tom Burke reporters

The yield on 10-year Government bonds fell below the 8pc mark for the first time since November 2010 as investors dipped their toes in riskier assets.

Unlike Greece and Portugal which are also in receipt of bailout funds, our cost of borrowing has been edging lower as we meet the targets set out by the EU/IMF/ECB troika under the terms of the €67.5bn bailiout loans.

The 10-year bond dipped to 7.998pc having reached as high as over 14pc earlier.

Investors are also banking on that eurozone policymakers will reach a solution to the debt crisis.

Ireland is expected to make a tentative return to international debt markets some time next year.

We are currently priced out of the markets as rates above 6pc are seen as prohibitive.

Meanwhile, junior Enterprise Minister Brian Hayes confirmed that this is the rate at which we are likely to return to the markets next year if we can.

In a speech to the Eolas Future of State Assets Seminar, he said state owned utilities are returning only a 2pc equivalent return of year end shareholder funds compared with a European average of over 5pc.

"Then contrast this to a situation of the state having to most likely borrow at around 6 per cent rates when we return to the markets," he said.

Mr Hayes also said the Government is continuing to assess the case for State ownership.

Under the terms of the bailout loans, Ireland must sell off some state assets.

The Government is already looking at the part-sale of the ESB.

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