Ireland took it’s biggest step towards exiting its bail-out programme selling €5bn of 10-year government bonds, the first sale of such long-term debt since restrictions from the markets more than two years ago.
Philip O’Sullivan, NCB Stockbrokers chiref economists said: “This represents an important milestone in the country’s re-engagement with the bond market.”
Wednesday’s bond sale, together with a January sale of €2.5bn in five-year debt and the €1.3bn raised from selling state-rescued insurer Irish Life last month, means Ireland has now achieved most of the €10bn it aimed to raise in funding this year.
Michael Noonan, Minister for Finance, said demand had been so strong that the debt agency had increased the latest bond sale from the €3bn issue it had planned. There has been an extraordinary response to it and I don’t think you will have heard me use the word extraordinary before, he said. This brings us within about a 1.5bn towards what we need to the end of 2014. That puts us in a very strong position. A lot of ministers visiting various countries for Patrick’s day will have a fairly impressive piece of news.”
The sale was the biggest market test to date after resuming borrowing last year, and raised as much as double the amount that many traders had predicted would be offered. Even then, it was highly over-subscribed, with offers of 13 billion euros, the NTMA said.
Yields on Irish bonds, which reflect the cost of its government borrowing, are now lower than those of Spain or Italy, neither of which have not received sovereign bail-outs.
Christine Lagarde, head of the IMF, has signalled the organisation will do what it can to help Ireland exit its bailout later this year. Speaking in Dublin last Friday, she said: “The number by which the deficit has been reduced, the determination showed in implementing the programme has been extraordinary.”