Friday, March 15, 2013

Ireland's Shining

There was good news out of Ireland this week, which has wider implications as a sign that the credit crisis is ending in parts of Europe.  Ireland was able to sell 10-year bonds for the first time since it was bailed out in 2010.  Ireland's initial intent was to sell 3 billion euros of bonds but increased the size to 6.5 billion euros on investor demand.  This section of a Bloomberg article details the bond auction:
The yield on the bond was 240 basis points over mid-swaps, a fixed-market benchmark, according to the person. The sale attracted at least 12 billion euros of bids, according to two people.
The NTMA last issued 10-year bonds in 2010, before the near-collapse of the country’s banking system prompted investors to shun the nation’s debt. In November of that year, the Irish government asked for a 67.5 billion-euro international rescue in a three-year program.

The NTMA hired Barclays Plc, Danske Bank A/S (DANSKE), Davy, HSBC Holdings Plc, Goldman Sachs Group Inc. and Nomura Holdings Inc. as joint lead-managers for the transaction.

“This represents an important milestone in the country’s re-engagement with the bond market,” said Philip O’Sullivan, an economist at Dublin-based NCB Stockbrokers today. “Ten-year issuance could have important ramifications for Ireland’s credit rating and its plans for a successful exit from the bailout program at year-end.”
The yield on the Irish 5 percent bond maturing in October 2020 has fallen from a euro-era high of more than 14 percent in July 2011 to 3.65 percent.

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