Latest Irish bond sale nets €1.5bn

Marion Dakers
IRELAND successfully sold €1.5bn (£1.27bn) of treasury bonds yesterday, though investors demanded higher yields to compensate for continued fears of a sovereign default.

Ireland sold €500m of four-year bonds with an average yield of 4.77 per cent, up from
3.63 per cent in the last auction in August. The average yield on an eight-year bond rose to 6.02 per cent from 5.09 per cent in June.

But the spread between Irish 10-year bond yields and the European benchmark of
German Bunds fell to 402 basis points from the euro lifetime high of 425 basis points set on Monday. The cost of insuring Irish debt against default also fell.

“People realised that Ireland does not have a liquidity issue and not much of a solvency issue either,” said Brian Devine, economist with NCB Stockbrokers in Dublin. “People recognised this is good value at these yields.”

Spain and Greece also enjoyed strong sales in their own bond offerings yesterday.

Greece, seen by investors as one of the riskiest Eurozone economies, saw the average yield on the 13-week treasury bills it offered fall to 3.98 percent from 4.05 percent in a previous sale in July.

The Greek government sold €390m of bonds, three-quarters of which were snapped up by foreign investors.

Meanwhile, Spain neared the top end of its €6bn to €7bn target in its treasury bill sale, though yields rose on 12-month and 18-month bonds after falling in the two previous placings.

Spanish government bond spreads over Bunds also narrowed, hitting 172 basis points, its tightest in a week.