INVESTORS ARE distinguishing “fairly clearly” between the risks associated with Irish and Greek debt, a National Treasury Management Agency (NTMA) official said, as a further €1.5 billion was raised selling Government bonds.
The agency borrowed €600 million on a 4 per cent bond maturing in 2014 and €900 million on a 4.5 per cent 2020 bond at auction, the second to be held this year.
The debt-raising brought the Government’s borrowing this year to €8.4 billion, or 42 per cent of the State’s requirement of €20 billion for 2010 to meet the deficit in the public finances.
“Even with the uncertainties about the specifics of how the EU will deal with Greece’s debt, the auction showed we can still get a good deal,” said Oliver Whelan, director of funding and debt management at the NTMA. “It is fairly clear that the market is differentiating between Irish and Greek debt.” He added that Ireland was often not being considered among the countries after Greece and Portugal struggling to rein in spiralling public deficits.
The agency would seek to raise a further €1 billion and €1.5 billion in the next bond auction to be held on March 16th, said Mr Whelan.
Bond auctions are being held by the NTMA on the third Tuesday of every month this year.
Bids totalling €3.71 billion, or 2½ times the maximum amount on offer in yesterday’s auction, were received by the agency. The 2014 bond was sold at an average yield of 3.033 per cent, while the 2020 bond was sold at an average yield of 4.745 per cent.
The yield on the equivalent 10-year German bond, the benchmark in the market for gauging sovereign debt risk, stood at 3.2 per cent yesterday.
The difference in yield, or spread, between the debt was unchanged at 1.53 per cent. Mr Whelan said he “hopes and expects” the spread to narrow further.
In contrast, Greece’s borrowing costs rose for a third day, as the interest rate difference between Greek and German 10-year debt rose to 3.26 per cent.
