State sells €1bn in bonds

THE GOVERNMENT has sold €1 billion in five-year and 10-year bonds as part of its efforts to raise a record €25 billion State borrowing required this year.

The National Treasury Management Agency (NTMA), the body which manages the Government’s debt, auctioned €300 million of 4 per cent notes maturing in 2014 to yield an average of 3.90 per cent, and €700 million of 4.4 per cent securities due in 2019 to yield 5.19 per cent.

Investors bid for 4.8 times the 2014 debt offered and 1.8 times the 2019 securities available.

The Government is raising cash as the economy shrinks at the fastest pace in the euro zone. The nation’s credit rating was lowered one level to AA+ by Standard Poor’s this year.

“The fact that they managed to raise the maximum amount they wanted for this auction is an encouraging sign,” said David Schnautz, an interest-rate strategist at Commerzbank in Frankfurt. “We still see Irish bonds as a riskier asset, but things have improved a lot.”

The NTMA raised €2 billion in auctions in March and April and €10 billion in two bond sales in January and February. – (Additional reporting: Bloomberg)