The National Treasury Management Agency (NTMA) raised €1 billion this morning in an auction, selling five- and 11-year bonds.
Up to €300 million of 4 per cent debt maturing in 2014 was sold this morning, and €700 million of the 4.5 per cent securities due in 2020. Both bonds were oversubscribed.
Alan McQuaid of Bloxham stockborkers said the sale, which was the third of five monthly bond auctions planned for the second half of the year, was "all the more impressive" as an estimated €16 billion is due to be sold by a number of euro zone countries in the coming days.
The sales programme has raised close to €25 billion needed to meet funding requirements of €20 billion announced in the Supplementary Budget on April 7th and refinance a €5 billion bond that matured in April. Some €16 billion was raised through three syndicated bond issues in January, February and June, and €7.7 billion through seven bond auctions held between March and September.
Two further auctions are still to take place.
"Although the NTMA has been successful in raising the government's shortfall between spending and tax revenue this year, we as a nation shouldn't become complacent and believe that the answer to all our problems is to keep on borrowing," Mr McQuaid said in a note.
"Quite simply, the huge levels of debt we are building up are unsustainable in the long-run. Ireland is now in a position where it needs to borrow more to fund a larger budgetary deficit, while paying higher costs for this borrowing. This means that ever increasing proportions of the country's tax revenues will be needed to service the national debt."
He identified the legislation National Asset Management Agency (Nama), the Lisbon Treaty referendum re-run and the Budget as potential stumbling blocks for the Government over the next few months, "any one of which has the potential to send Irish borrowing costs soaring again if things go the wrong way".