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IRELAND HAS RETURNED to the bond markets for its first major borrowing activity in 16 months.
The National Treasury Management Agency has made a ‘switching offer’ allowing the holders of a certain bond, which matures in January 2014, with a replacement which will be repaid in February 2015.
In a statement the NTMA said the offer was being held in response to inquiries from market investors who had demanded Irish government bonds maturing in 2015.
€3.53 billion of bonds, which were originally due to mature in January 2014 – with an average yield of 4.902 per cent – have been exchanged for bonds maturing in 2015 with an average yield of 5.152 per cent.
Previously there had been no Irish bonds maturing in 2015 – after the bonds maturing in January 2014, Ireland was not due to paying out on any more bonds until April 2016.
The move means that Ireland will need to have less cash on hand in 2014, as fewer bonds will be honoured on that date. There are still €8.2 billion in January 2014 bonds still in circulation after today’s move.
An NTMA spokesman said the decision to re-enter the markets had reflected “substantial demand among investors for our short-dated paper and the resulting decline in yields on Irish paper recently”.
The January 2014 mark was also particularly pressing for the government, which hopes to emerge from the EU-IMF programme in the second half of 2013.
Before today’s deal, the government would have needed either to raise almost €12 billion in January 2014 to repay the bonds that were maturing, or to ‘roll over’ those bonds by issuing newer ones. That could have been difficult if the economy remained fragile after ending the EU-IMF deal.
Ireland’s last visit to the bond markets was in September 2010, when Ireland sold €1.5 billion in bonds maturing in 2014 – at a yield of 4.767 per cent – and in 2018, with an average yield of just over 6 per cent.
Two months later Ireland was priced out of the secondhand bond markets and was forced to negotiate a bailout from the EU and IMF.
The NTMA will resume issuing new bonds later this year, under an experimental process to gauge investor interest in lending to Ireland.
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An encouraging, if small, first step out of the shadows
Encouraging, come on get real. We take one small step forward and powers that be in europe punches us right in the face and knocks us 3 steps back against the wall.
can anyone explain to me why it is seen as an overwhelming national objective to return to the bond markets?
Do you want to live with your mom for the rest of your life. Basically
Bit like a hungover alcoholic getting into an early house.
Taking your question at face value…
The idea is that if we can get back to the bond markets, then we don’t have to borrow from the EU or IMF – and we therefore don’t have to follow their terms and conditions for it.
Naturally it would be best if we didn’t have to borrow from ANYWHERE, but in the climate we’re in we have to borrow from SOMEWHERE, and the reason we have to live under the Troika’s thumb is simply because they won’t give us the money unless we agree to follow their rules on how we can spend it.
We need to get back to spending less.
It means a hit to our lifestyles though.
Are people willing to take that?
No, they have gotten too soft.
Recent exuberance of bond markets, which has seen bond yields decline in periphery nations, would appear to be driven by Draghi’s looser monetary policies. The danger here is this inflationary approach could take on a life of it’s own and herald a new phase in the crisis.
http://mobile.bloomberg.com/news/2012-01-22/draghi-makes-euro-favorite-for-most-profitable-carry-trades-with-rate-cuts
Just posted this on another thread but I think its probably as relevant here. For those confused and distracted heres a documentary on whats actually happening : http://youtu.be/hEw7p5W-hM8
So much for the scaremongering by the dame & it’s bitchs . Bond dealers would eat chips out of anybody’s knickers, so to speak, Irrelevant of the wearers past.
i think you’ll find that this comment makes no sense! of all days today is when we prove that we will repay debt?! and the market then opens up to us…… but this somehow proves your point how??
I agree Rob your comment makes no sense at all.
Obama is sending a trillion dollar note to bail out Europe, monty burns will deliver it in the spruce goose.
did you ever see the film million pound note 1950 s explains it all
It’s a sad thing when having to borrow money is seen as good news.
We HAD to borrow before this. The news is that we CAN borrow now. I thought the article made this very clear.
:)
lol, maybe by the time those bitches mature the euro will be worth fu*k all so we will pay them back in 10000 euro notes
Kicking the can down the road. We’ll have the same problems in 2015, only difference is we’ll be deeper in debt.
How can we borrow we are shafted until 2031 we will be sold out yet again
Does that mean the department has lost that 3.6 billion AGAIN they found down the back of the sofa a while ago?
Ireland should start doing the lotto.
Love it Cairo pmpl
No, you’re hilarious Eileen.
This is very good news. Amazing how all the burn everybody crew aren’t in here denouncing the NTMA for making a deal with bondholders.
Ha ha ha …You are hillarious Donal.
So we swapped 1 bond for another , so what ! We were sold out yesterday and every day ,
I still say we should stand tall on our own take or knocks and build ourselves up as an independent
nation and not as one of the islands off the coast of Europe .
We are no way near being solvent.
Enda is just licking up to his puppet masters.
have your say