NTMA raises €1.5bn but yields higher

The National Treasury Management Agency has raised a further €1.5bn in funding as part of its monthly auction process but at a higher yield than in previous auctions.

The NTMA sold €750 million worth of 4.5 per cent debt maturing in 2018 to yield 5.09 per cent. That
compares with a yield of 4.55 per cent in August, when it last sold that debt.

It also sold €750 million of 4.6 per cent six-year bonds to yield an average 4.521 per cent - higher than the 3.663 per cent yield at the previous auction of those bonds in April.

Investors bid for 3.1 times the 2016 securities offered and 2.9 times the 2018 debt.The NTMA's latest monthly auction took place as the relative cost of borrowing for Europe's so-called peripheral nations continue to rise.

The premium investors charge to hold Irish 10-year debt over the German equivalent widened 18 basis points to 282 basis points today. It reached 306 basis points on May 7th.

The Spanish yield premium widened 4 basis points to match a euro-era high of 208 basis points, while the Greek premium jumped 36 basis points to 606 basis points.

The NTMA said it was satisfied with the strong level of demand for Irish Government bonds in what it said was "the very difficult market conditions which obtained today following Moody’s downgrade of Greece."

Ireland has now completed more than 80 per cent of its long term borrowing programme and is in "a strong funding position" according to the agency. Allowing for other cash balances the Exchequer is fully funded through end-2010 the agency said.

It also said that the NTMA will continue for the time being its regular series of monthly bond auctions with the next auction scheduled for 20 July 2010.

Additional Reporting: Bloomberg