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Irish Bond Yields

24K views 93 replies 12 participants last post by  odlum833 
#1 · (Edited)
As Ireland exits the program at the end of this year the yield (or interest rate) on our sovereign bonds will be crucial. Right now we are well within sustainable territory at around 3.9% 10 year. It had dropped to just 3.4% a couple of weeks a go before rising above 4% (mainly due to concerns central banks are not doing enough to stimulate demand in the world - specifically the Japanese Central Bank). But it's downward again and demand is increasing all the time.

So it's important to keep track. This can be done here

http://www.investing.com/rates-bonds/world-government-bonds

Whatever happens we need a rate really below 5% and there is absolutely no danger of Ireland failing to exit the program at the end of the year. But the lower the yield the better off we are as well.

Quite telling Italy is at 1% yield for a 1 year bond. Ireland is at .33%. Italy 2 year is at 2.2%. Irish 2 year 0.93%. Doing very well.

So let's keep this thread for these updates bad or good. Thanks!:cheers:


*As investors buy bonds the price of bonds rises and thus the interest rate falls, when they sell the price of bonds fall and the interest rate rises*
 
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#6 ·
NP

Some positive reaction to Moody's decision on the market this morning pushing interest rates lower which is good for the government

http://www.investing.com/rates-bonds/ireland-government-bonds?maturity_from=90&maturity_to=260

cheers for the link odlum. Had been looking for one since bloomberg stopped the free service. Good to see the drop. Budget next month. I think they should stick to the €3.1 billion target. This would lead to a further drop in the yields.
 
#7 · (Edited)
They should stick to the target. There is no point in stretching out the inevitable IMO. If they keep to the target we will have a primary surplus next year. That is what our creditors want to see and it will pay off in the long run through lower borrowing and interest rates.

Of course Labour want to protect their union paymasters so I expect a bit of scuffle between the coalition parties. But I think in the end it will be close to the full amount.

EDIT: Also keep in mind that the public link there might not be completely accurate. The 10 year yield is actually around 3.8%, this today's fall.


 
#8 ·
Agreed. If they stick to the target the we will at least have reached a point were we are not borrowing unnecessarily ( apart from debt servicing which is unavoidable). Also, completing the process of adjustment now leaves them with a free hand in the next budget rather then spreading cutbacks out for another year and borrowing more simply to cut what you don't cut.

As it stands, there has been so much focus on the headline figure and Labours opposition to it that it will be viewed as a major defeat for them if 3.1 Billion in cuts are announced. In fact their recent jump in the polls will I feel embolden them to make it a red line issue. So, more short termism....whats not cut now will just have to be cut next year.

C
 
#15 · (Edited)
Market fed up with the US. Dumping treasuries on fear the US might just default later this month if they don't get their act in gear politically. This is what panic looks like in short dated maturities.

http://www.investing.com/rates-bonds/u.s.-6-month-bond-yield

And here is a graph showing the inversion with the yield on the x axis and the maturity on the y axis. This is what needless stupidity looks like.



Irish bonds so far unaffected by the madness across the Atlantic. The downward trend in the yields continued today and the market seems very benign if not enthusiastic about the new budget adjustments later this month.
 
#10 ·
Yep

Moody's outlook change sends Irish debt premium to 3-1/2 year lows



Mon Sep 23, 2013 8:33am EDT
By Marius Zaharia

(Reuters) - Ireland's debt premium fell to its lowest in almost 3-1/2 years on Monday after Moody's moved a step closer to restoring the country's investment grade ratings months before its exit from a bailout programme.

Moody's remains the only one of the three big agencies to class Ireland as "junk", but its move to lift the rating outlook to stable from negative is against a trend of mostly negative rating actions against euro zone sovereigns in recent years.

The outlook change came just days after Portugal, another country nearing the end of its bailout, was placed on credit watch negative by Standard & Poor's.

While investors already regard Ireland as investment grade, its credit rating trend reinforces its ongoing separation from the rest of the periphery, analysts said.

"The decoupling is already taking place," UniCredit rate strategist Luca Cazzulani said.

Ten-year Irish bond yields were last down 3.3 basis points to 3.858 percent, narrowing the gap with the benchmark German Bund yields to 196 basis points, the lowest since May 2010 and down from euro-era highs of over 1,200 bps.

...
More in the link.

http://www.reuters.com/article/2013...1DA20130923?feedType=RSS&feedName=marketsNews
 
#11 · (Edited)
Reuters saying Moody's could raise Ireland's credit rating after the October budget which would be a further huge boost to the government ahead of the exit from the program putting further downward pressure on yields and tightening the spread over Germany.

The turnaround is largely the result of strong economic data. But there are also hopes that, after the country's budget in October, Moody's could raise Ireland's Ba1 rating one notch - taking it back into investment-grade. S&P and Fitch rate the country at BBB+.
http://www.reuters.com/article/2013/09/27/irish-banks-bonds-idUSL5N0HM2IV20130927

Now it's up to the Labour side of the coalition to deliver.
 
#12 ·
Moody's outlook makes no sense and is very far behind events. I'd have understood in 2011 when Ireland's bond yields were spiking at rates even the Greeks would find alarming and it looked a serious possibility that we'd default on our loans. In 2013 however, it's hard to see why anyone would rate Ireland's debt at junk status. Our economy is slowly healing, the budget deficit is coming down, the eurozone crisis has receded and the banking sector is gradually approaching normality.
 
#13 ·
Test coming this week with the crisis in Italy. I guess we will find out if Ireland has truely decoupled from the periphery in the minds of investors because Italy and Spain are going to be routed over the Italian political schenadigans. Be interesting to see if Ireland can avoid most, if not all, the contagion effect in our bond market.
 
#14 · (Edited)
Didn't see this coming.

The NTMA has announced the suspension of all treasury bill and bond sales until next year saying their funding position is too strong for more auctions.

That means the market won't be tested prior to the exit from the troika program at the end of the year.

IRELAND SUSPENDS BILL SALES IN 4Q ON `STRONG FUNDING POSITION'
They have too much money.

Bond yields falling back on the news.
 
#16 ·
Thanks Odlum.

That's somewhat surprising given the procession of Economic think-tanks recommending the full 3.1bn adjustment. I might have expected some reaction now that the Government have opted for a less severe adjustment.

We can now surmise that the markets are more concerned that we reach the targets as opposed to how we achieve the targets.

I heard Brendan Howlin on the News last night. He stated that with the 2.5bn reduction we will reach a deficit of 4.8% of GDP. That indeed id a decent margin beyond the target of 5.1%. And in Effect means that we will have a 1.8% reduction by the end of 2015.

That in itself makes me wonder what the likely positive impact the extra 600m in adjustments could have had. Certainly, it would take us closer to 4% and a 1% remainder between now and 2015.

Do you know what the current deficit is, 7.1%??

Likewise, could strong Economic mitigate against the 1.8% diffential to reach the 3% Debt target.

C
 
#17 · (Edited)
Market continues to cheer Irish progress for now.


Irish bond yields fall to 4-month low


Irish government bonds rose, pushing 10-year yields to the lowest level in four months, as it prepares to exit the financial bailout program that it entered almost three years ago. Italian and Spanish securities also advanced.

“The news that Ireland plans to exit its bailout program is maybe also proving positive for the other peripheral countries,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “Spain and Italy are in a different camp from Ireland but I wouldn’t rule out a bit of sentiment coming across. However, the US debt issue is still dominating everything and there remains hope this can get resolved, which is keeping yields stable.”

Ireland’s 10-year yield fell four basis points, or 0.04 percentage points, to 3.68 per cent at lunch-time today, after dropping to 3.67 per cent, the least since May 31st. The 3.9 per cent bond due in March 2023 rose 0.28, or €2.80 per €1,000 face amount, to €101.725. ...
Also the spread over Germany narrowed to 179 basis points - a new post crisis low

Tradeweb ‏@Tradeweb 1h
Ireland 10Y benchmark bond mid-yield: 3.65%; Spread v. 10Y German bund 179.6; -4.8 bps from prev close
 
#19 ·
Ireland 23rd December



Pair Yield Prev. High Low Chg. Chg. % Time
Ireland 1-Year 0.15 0.16 0.17 0.13 -0.01 -8.07% 8:44:06
Ireland 2-Year 0.89 0.89 0.89 0.88 -0.01 -0.78% 8:38:55
Ireland 3-Year 1.72 1.72 1.72 1.71 -0.00 -0.12% 9:02:13
Ireland 5-Year 2.07 2.08 2.08 2.07 -0.02 -0.82% 9:02:32
Ireland 7-Year 2.60 2.61 2.65 2.56 0.00 0.00% 8:55:38
Ireland 8-Year 2.84 2.84 2.85 2.84 0.00 0.14% 9:02:05
Ireland 10-Year 3.44 3.45 3.52 3.42 0.00 0.00% 9:00:15
Ireland 15-Year 3.86 3.86 3.87 3.86 0.01 0.21% 8:59:28

10 year - 3.43%.
 
#20 ·
Irish borrowing costs continue to slide.

10 year yield down to just 3.15%

5 year yield at 1.56% - well below the UK and only narrowly above the US incidentally.

7 year yield fell below 2% for the first time yesterday.

Plenty of value still to be had for investors at the long end of the curve so I expect yields to tighten further. Lower end yields are very low so it's very cheap for the NTMA to refinance right now. Historically low.

It shows the market has big faith in the country's recovery.



http://www.investing.com/rates-bonds/ireland-government-bonds?maturity_from=90&maturity_to=260
 
#21 ·
Irish borrowing costs continue to slide.

10 year yield down to just 3.15%

5 year yield at 1.56% - well below the UK and only narrowly above the US incidentally.
Even less now at 3.09% and 1.5% respectively. That's pretty amazing - we're also trading at lower levels than 2006 when there was no fear about the euro zone or Ireland's creditworthiness when we still had a AAA rating. Too bad we don't have any high-yielding debt coming up for maturity soon which we could refinance at a very low rate!
 
#22 ·
The NTMA is issuing bonds on the 5th of March - don't know the maturity dates.

The "problem" is that Ireland has so much cash in reserve it does not need to go to the market at all this year. However it's prudent to have continuous access so they are issuing more bonds and may offer a swap to holders of 2 year bonds for longer dated maturities.
 
#23 ·
Closing in on 3% 10 year.

http://www.investing.com/rates-bonds/ireland-government-bonds?maturity_from=90&maturity_to=260


If someone had said in 2010 that Ireland would be issuing debt for 10 years at or below 3% they would have, with much justification, thought you were insane.

And look at the 5 year borrowing costs at 1.46%. It's only a couple of weeks a go that yield crossed over UK 5 year gilts. At that time the yield was around 1.7%.

Now Irish 5 year debt is 1.48% and the Gilt equivalent is 1.9% :nuts:

5 key factors pushing up the price - ECB interest rate decision on Thursday, improved domestic economy indications, Moody's ratings upgrade and unemployment figures. Plus investors a bit easier about Ukraine situation.

The one sour spot is that there may be over exuberance. The economy is still fragile and the eurozone is not fixed. We are still vulnerable to external shocks.
 
#25 ·
Borrowing costs fall to record low ahead of today's bond auction

DONAL O'DONOVAN – PUBLISHED 13 MARCH 2014 02:30 AM

THE cost of government borrowing has fallen to all-time lows.


The cost of new government 10-year debt hit 3.015pc yesterday ahead of today's deal to raise €1bn on the bond market in the first public auction since the end of the bailout.

Analysts have said the deal is already shaping up to be a big success.

"We've seen decent buying in the run-up to the auction because some investors are fearful around allocation," according to Ryan McGrath, of brokers Cantor Fitzgerald. He was referring to a concern that demand for the bonds will outstrip supply, leaving some people who want to invest empty-handed.

Today's bond deal is also the first since Ireland regained its "investment grade" or lower risk status with rating agency Moody's in January, so market watchers will be keen to see evidence of Asian and Middle East-based investors lending to Ireland, as officials hoped would happen following the ratings move.

Economist Conall MacCoille, of Davy Stockbrokers, said borrowing costs were falling across Europe but Ireland was benefiting in particular because of a recent run of positive data.

"Jobs numbers are stronger, retail sales have been positive and financial results from AIB and Bank of Ireland indicate that they will return capital to taxpayers. It also looks like NAMA could be wound up more quickly, reducing a contingent liability on the State," he said.

NAMA said it paid €3bn yesterday to the main banks to redeem senior bonds that were used to finance the agency's original transfer of property loans.

It means NAMA has now paid off €10.5bn, around a third of the original €31.8bn bill.

The cash will be used by the banks to cut their debt to the European Central Bank (ECB).

We will learn today whether the economy here grew in the last three months of 2013, and if so how quickly.

The provisional gross domestic product (GDP) numbers for the final quarter of the year due to be published today will make it possible to calculate last year's overall rate of growth.

The Government will be hoping that the recent gains in the number of people in work has given a boost to the overall growth figures.

But GDP figures have been affected by the impact of the pharmaceutical patent cliff, with some experts claiming they don't give a true picture of the recovery taking place.

Yesterday on the markets investors appeared to be betting on more positive numbers.

The yield, or interest rate, that investors demand to lend to Ireland for 10 years fell to 3.015pc.

It's the lowest rate ever. The previous low was in June 2005 when borrowing costs hit 3.02pc.

Eight weeks ago it cost the State 3.4pc to borrow for 10 years.

In the worst days of the euro crisis in mid-2011 Ireland was unable to borrow on the markets and bonds were changing hands at prices that implied the interest rate would be above 14pc to borrow for 10 years.

Borrowing costs have plunged since then for a number of reasons, and not just for Ireland.

The initial trigger for the sharp reduction in interest rates was confidence that the euro itself would survive the financial crisis.

The other big factor is the low interest rate environment in the euro area and elsewhere – which in effect causes cheap money to slosh through the global system in the hunt for investments, even relatively risky investments, in order to generate a return.

Irish Independent - Business Section
http://www.independent.ie/business/...ow-ahead-of-todays-bond-auction-30087632.html
 
#26 ·
Bonds issued for less than 3% today! We're back issuing scheduled bonds which marks our full return to the government debt markets. The NTMA expected a coupon rate above 3% but they got a smidgen below it thanks to huge investor demand. I just hope this presages a return to PPP markets for much-needed projects like DU, MN, the Atlantic Corridor and so on.
 
#27 · (Edited)
Regaining lost ground this morning. The yield last week was 2.9% on the primary market so we are looking to beat that in the secondary market.

http://www.investing.com/rates-bonds/ireland-government-bonds?maturity_from=90&maturity_to=260

Unusual that the interest rate would be lower in the primary market. Normally there is a small premium on these things but not so last week.

On the point above - every single basis point the sovereign yield falls brings every project much closer to fruition.
 
#28 ·
Well done, do people judge the pain worth it though?

Then hindsight is wonderful thing, trying to second guess alternatives is a mugs game. You can of course look to Greece to worse alternatives.

Has anyone paid political price for it all? Or is all the mud spread evenly and left everyone else just feeling tired and cynical.
 
#29 ·
Yes the previous government parties paid a major price for their disasterous mismanagement which have hurt a lot of people very, very badly - some with tragic consequences. People were just so angry they have enough and their vote collapsed.

Trials have begun of former bank executives too - 3 of which are already facing jail time if convicted. I think there will be good few trials in the coming years as investigations in to what went on are continuing.

I also think there was no choice in hindsight but to bail out the banks as painful as it was.
 
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