Eurozone debt sales succeed

Marion Dakers
INVESTORS snapped up €1.5bn (£1.2bn) of Irish debt at auction yesterday, though the Dublin government was forced to offer high yields to tempt buyers.

The auction attracted bids of €5.1bn yesterday, the strongest demand in an auction so far this year, in part due to yields far above the German gilt benchmark.

Ireland will pay 3.62 per cent on four year bonds and 5.38 per cent to €1bn worth of 10 year bonds.

Eurozone counterpart Spain also secured strong demand for its debt sale yesterday, offloading €5.51bn of bonds to tighten yield spreads against German government debt.

Irish central bank governor Patrick Honohan warned that governments needed to convince investors they were committed to cutting budget deficits, even as he suggested in a speech yesterday that the cost of the Irish bank bailout may rise further.

“There is, for these stressed sovereigns, no question as to whether national growth is best served by bringing the public finances back promptly to a convergent path,” he said yesterday.

Honohan restated that Ireland was committed to reducing its deficit to an EU target of three per cent of GDP by 2014