Ireland comfortably exceeds its return to the debt markets

Ireland comfortably exceeds its return to the debt markets

  • Ireland has put its credibility to the test with the three-month bond auction.
  • The interest rate reached by the bonds is slightly lower than 2%.
  • The risk premium for Ireland has been reduced during the last twelve months and is below 500 points.
Prima de riesgo

Informative panels of the Madrid Stock Exchange showing trends in European risk premiums. EFE

Ireland put its credibility to the test this Thursday with the auction of three-month bonds for 500 million euros, a significant amount to ratify the progress made by an intervened country.

The National Treasury Management Agency (NTMA) managed to place the government bonds at an interest rate of 1.8 percent on the first issue of debt since September 2010, two months before the European Union (EU) bailout and the International Monetary Fund (IMF) to this country, quantified in 85,000 million euros.

This debt issue is the first since September 2010 The interest rate reached by the bonds , due on October 15, is slightly lower than the 2% expected by the Government of Dublin and international markets, which demonstrates the confidence that is generating the economic policy of Ireland.

 

This was highlighted on Thursday by the Irish Finance Minister, Michael Noonan , who called this first issue of debt “success”, because it represents a “milestone” in the “road to recovery” of the national economy.

The loan is, in fact, a “zero risk” for investors, as the EU and IMF funds guarantee their return in three months, but for Ireland it is a good proof of the improvement of their image abroad. to more important challenges.

The Irish Minister of Finance insisted that his government’s goal is to return to the debt markets to obtain financing through the medium and long-term bond auction in 2013, when the program of aid to this country ends.

“The markets have reacted positively to our strong application of the program to date, to the resounding ‘yes’ in the recent referendum on the fiscal stability treaty and to the decision taken at the (European) summit last week to separate the negative links between the (sovereign) debt and that of the banks, “he declared.

Noonan recalled that Ireland’s risk premium has been reduced considerably during the last twelve months and is now below 500 points, reflecting the growing confidence of foreign investors in the national economy.

The markets have reacted positively to the resounding ‘yes’ in the recent referendum Meanwhile, the Irish Treasury plans to follow step by step, launching this year “probe balloons” to test the market through the issuance of bonds to a period of Longer expiration, between four and six months, according to experts.

The Dublin Executive has committed to the supervisory triad of the European Commission (EC), the European Central Bank (ECB) and the IMF to reduce this year its public deficit to 8.6 percent of GDP through a plan of adjustment valued at 4.2 billion euros.

The Government hopes to achieve these objectives in a context of economic growth for this year of 0.5 percent, although it is aware that it depends, to a large extent, on external factors, such as the stabilization of the situation in the euro zone.

Noonan will announce next week the figure of the Irish GDP recorded during the first quarter of the year, while the troika will publish its latest analysis on the government’s performance to meet the conditions of its rescue between the past months of April and June.