Government raises €1bn in post-bailout bond auction
THE Government has successfully raised €1bn in a post-bailout bond auction.
The yield on the 10-year bond was 2.967pc while the bid to cover ratio was 2.9 times with total bids of €2.8bn.
“The completion of today’s auction marks Ireland’s full return to the markets for the first time since September 2010 and brings to a successful conclusion the NTMA’s programme for a phased return to the markets carried out over the past two years,” said John Corrigan, chief executive of the NTMA, which manages the country’s debt.
“The €1bn funding raised today, together with the €3.75bnraised in the syndicated issue on 7 January, amounts to almost 60pc of our funding target of €8 billion for the full year.”
The move comes as the cost of Government borrowing fell to an all-time low – new government 10-year debt hit 3.015pc yesterday ahead of today’s deal.
Today’s bond deal is also the first since Ireland regained its “investment grade” or lower risk status with rating agency Moody’s in January, so market watchers will be keen to see evidence of Asian and Middle East-based investors lending to Ireland, as officials hoped would happen following the ratings move.
Economist Conall MacCoille, of Davy Stockbrokers, said borrowing costs were falling across Europe but Ireland was benefiting in particular because of a recent run of positive data.
“Jobs numbers are stronger, retail sales have been positive and financial results from AIB and Bank of Ireland indicate that they will return capital to taxpayers. It also looks like NAMA could be wound up more quickly, reducing a contingent liability on the State,” he said.
NAMA said it paid €3bn yesterday to the main banks to redeem senior bonds that were used to finance the agency’s original transfer of property loans.
It means NAMA has now paid off €10.5bn, around a third of the original €31.8bn bill.
The cash will be used by the banks to cut their debt to the European Central Bank (ECB).
We will learn today whether the economy here grew in the last three months of 2013, and if so how quickly.