Kenny says bond market return a sign of 'progress'


Taoiseach Enda Kenny has described Ireland’s re-entry to the primary bond markets for the first time in two years ago as "a measure" of the economic progress the State has made.

Investors today paid €5.23 billion for bonds due to mature in 2017 and 2020 in a sale and exchange offer by the National Treasury Management Agency (NTMA).

It was the first time Irish bonds with maturities of two years or more had been offered to new investors since September 2010, a short time before the EU-IMF bailout.

The 2017 bond on offer today carried a yield of 5.9 per cent and the 2020 bond a yield of 6.1 per cent. The weighted-average yield on the combined transaction was 5.95 per cent, the NTMA said after the auction closed at 4.30pm.

Some €4.19 billion was spent on the two longer-term bonds on offer - a new five year bond maturing in October 2017 and an existing bond maturing in October 2020.

The remaining €1.04 billion was paid to exchange holdings of shorter-dated 2013 and 2014 bonds into the 2017 and 2020 bonds.

“We are very pleased with the success of today’s transaction, particularly the fact that investors committed more than €4 billion of new money to our first long-term issuance since September 2010," NTMA chief executive John Corrigan said.

"This marks a very significant step for Ireland on the way to full bond market access. As a result of today’s transaction, the NTMA has now covered a significant proportion of the €8.2 billion bond maturing in January 2014 which up until now has been seen as a challenging 'funding cliff'.”

Speaking in Co Clare, Mr Kenny said it was particularly important to note that the new bonds were long term offerings.

"It’s a measure of the progress we are making in emerging from the programme that we are in and it’s particularly important that these are long term papers that are involved here,” he said.

Minister for Finance Michael Noonan said he had always predicted that Ireland would be back in the markets by the summer of 2012 and insisted the move had not happened earlier than anticipated.

"Today’s commitment from investors of €5.23 billion represents very strong demand, the majority of which I understand to be from foreign investors," he said. "The strong demand and the fact that over €4 billion of this is new money is a significant step for Ireland in regaining our economic sovereignty."

Mr Noonan said that, while an important step, the true indicator of Ireland’s success would be "our full emergence" from the EU-IMF bailout programme and the return to the international markets at sustainable rates.

Today's return to the bond markets and the sale of Irish paper was a "good day" for the State, secretary general of the Department of Finance John Moran said.

Speaking to reporters at the MacGill summer school in Glenties after the markets closed, Mr Moran said some €4.19 billion of the €5.23 billion sold was new money.

"Today is a good day. It has been September 2010 since external investors have been prepared to lend new money to Ireland and now we find ourselves back in," Mr Moran said.

"I think it shows we are actually seeing the results of all the hard work that has been done not just by us but frankly by everybody in the country in terms of the sacrifices that have been made."

Mr Moran said he believed the most important thing about getting back into the markets was that once the Government entered the markets first, the banks would begin to start releasing themselves in terms of being able to look potentially going back to the markets in due time. Companies would also find it easier because it meant Ireland's reputation goes up.

Mr Moran said that with assumptions around debt sustainability we would like to be borrowing below 5 per cent if possible.

Earlier, Dankse Bank, the Danish parent company of National Irish Bank, described the NTMA’s move as a “surprise but not a complete shock”.

“This is extremely good news and clearly illustrates that Ireland’s recovery is on track,” the bank said.

The NTMA successfully raised €500 million in an auction of three-month treasury bills earlier this month at a yield of 1.8 per cent.

Yields on Ireland's benchmark 2020 bond were trading at 6.28 per cent, 100 basis points lower than a month ago and 70 basis points lower than Spain which has so far avoided going to international lenders for a full sovereign rescue.

The debt swap is the second the agency has undertaken this year. It successfully cut €3.5 billion in January from its hefty 2014 borrowing requirements, but the notes offered then were relatively short-term.