Ireland to sell bonds as market digests Italian vote

The State’s debt agency said on Monday that it planned to sell €1 billion of bonds this week, as European markets digest the results of Italian elections which point to a hung parliament amid a surge in support for anti-establishment parties.

The National Treasury Management Agency (NTMA) plans to sell bonds on Thursday that are due to be repaid in 2022 and 2028, it said in a statement. The agency has sold €5.25 billion of bonds in the past two months, out of a full-year target of between €14 billion and €18 billion.

While the market interest rate, or yield, on Irish 10-year bonds dipped 0.01 percentage points on Monday, the yield on Italy's benchmark 10-year bonds climbed 0.06 points to 2.03 per cent on Monday morning as projections based on ballot-counting indicated the Eurosceptic Five Star Movement and the anti-migrant League could reach a majority in at least one of the houses of parliament should they join forces.

“Markets have entered this election pricing in a very negligible probability of the populist parties having a prominent role in the next government,” strategists including Vasileios Gkionakis at UniCredit Bank AG, wrote in a note.

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The euro fell by 0.2 per cent to $1.2288, though it was cushioned by news that the Social Democratic Party voted to join Angela Merkel's next government, restoring a sense of political stability in Germany. – Additional reporting Bloomberg