Wednesday 18 September 2019

State 10-year borrowing costs have fallen below zero

Stock image
Stock image

The bond market shrugged off Brexit fears to lend €1bn to Ireland at a price which means the State is being paid to borrow.

The National Treasury Management Agency (NTMA) completed an auction of €1bn of Irish government bonds due to be repaid in 2029. The bonds have a 1.1pc interest rate, but they were issued at a discount - or negative yield - so bondholders will get back less than €1bn at the end of the 10 years. It is a sign investors think growth and inflation will remain weak, a point hammered home by the ECB in Frankfurt hours after the Irish bond deal.

Please log in or register with Independent.ie for free access to this article.

Log In

Despite the extremely low pricing there was strong interest in the bonds, with demand more than double the amount of debt available. The State has borrowed €12.25bn on the bond market this year so far.

Other Irish borrowers are also in the market. Permanent TSB has mandated banks to arrange an investor roadshow ahead of a planned bond, and Kerry Group will issue a 10- year euro denominated bond as early as today.

Irish Independent

Also in Business