Ireland Says They Want To Go Back To The Bond Market As 10-Year Yield Surges Past 9%
The National Treasury Management Agency has today said it will resume borrowing on the state’s behalf from international money markets as soon as conditions allow, saying Ireland may not necessarily have to draw down the bailout funds provided.
NTMA chief executive John Corrigan this morning said the agency was still monitoring market conditions, and that it would move to issue new Irish bonds – which the current bailout funds are being provided in substitute for – whenever conditions were better than the fixed rates offered by the EU and IMF.
The terms of the agreement reached with those two bodies, Corrigan said, did not “preclude the NTMA from seeking to fund in the markets itself”, the Wall Street Journal quotes.
“It was important from a debt management perspective to avoid a situation whereby Ireland would be faced with a “funding wall” upon the conclusion of the programme,” Corrigan said in the NTMA’s end-of-year statement.
The €67.5bn worth of 7.5-year loans being provided by Brussels and Washington are being offered at an average rate of 5.83%; at present, second-hand Irish bonds maturing in eight years’ time are trading at 8.625% this afternoon.
Ireland was forced to negotiate funding deals with the EU and IMF after the market costs for Irish borrowing spiralled beyond levels considered sustainable by the Irish state in September; the NTMA cancelled scheduled auctions for October and November, citing that the high interest rates were beyond what Ireland was willing to pay.
This afternoon, the interest rate being demanded by the markets for Irish 10-year loans – considered the benchmark measure among investors of a country’s ability to meet its obligations – continued to rise above 9%, a level around which it has hovered since before Christmas.
Elsewhere in the NTMA’s end-of-year report, the agency said the cost of paying interest to service Ireland’s national debt – which stood at €93.4bn at the start of the year – had risen to €4.8bn last year, the equivalent of over 15% of Ireland’s tax take for the year when compared to exchequer returns released on Wednesday.
That bill for serving Ireland’s borrowings was, however, €320m below the amount budgeted for.
Fine Gael finance spokesman Michael Noonan described the €4.8bn interest bill as the “toxic legacy of 13 years of Fianna Fáil government”.
Read more: http://www.businessinsider.com/ireland-bond-market-9-percent-2011-1#ixzz1AZROSd6f
Without coming clean and stop telling lies and a clean out of the current personal in the Department of Finance, NTMA and NAMA they have no chance and the market will let them know soon enough and they did see below.
By Abigail Moses
Jan. 10 (Bloomberg) — Portugal and Ireland led a surge in the cost of insuring against default on European sovereign debt to record levels on concern government funding costs are becoming unsustainable.
Credit-default swaps on Portugal jumped 11 basis points to a peak of 549, according to CMA. Ireland soared 26.5 basis points to an all-time high 682 and Belgium was 7 higher at a 255. That helped push the Markit iTraxx SovX Western Europe to a record 223 basis points.
Investors are bracing for debt sales this week from Portugal, Spain and Italy. Portuguese bonds fell today amid mounting speculation the nation will have to tap the European Union’s 750 billion-euro ($966 billion) rescue facility if its yields remain above 7 percent.
“As yields rise, markets will get more concerned Portugal will have to tap EU/IMF funding,” said Harpreet Parhar, a credit strategist at Credit Agricole SA in London. “The positive for Portugal is that it’s not locked out of the market yet. It can access funding, but at a cost.”
Credit-default swaps on Spain increased 4.5 basis points to 361.5, approaching the Nov. 30 record of 364, and Italy climbed 2 to 255, close to the 268.5 basis-point peak, according to CMA. Greece was up 14 basis points at 1,060.
Sovereign concerns also undermined confidence in the region’s banks, with the cost of insuring financial company bonds at the highest levels in almost two years.
The Markit iTraxx Financial Index of credit-default swaps on the senior debt of 25 banks and insurers rose as much as 6 basis points to 210, matching the March 12, 2009 record closing price, according to JPMorgan Chase & Co. The gauge was trading at 206 at 10:30 a.m. in London.
Markit Group Ltd.’s subordinated index jumped as much as 12 basis points to 375, before trading at 366.5. Swaps on the senior debt of Commerzbank AG surged 36 basis points to a record 277, according to CMA. That’s up from 142.5 basis points Jan. 4.
The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings climbed 12.5 basis points to 451. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings increased 2.5 basis points to 114.25, JPMorgan prices show.
Swaps on BP Plc jumped to a more than five-week high after a leak two days ago at its Trans-Alaska Pipeline System that carries 15 percent of U.S. crude output. Contracts on BP rose 11 basis points to 98, according to CMA.
A basis point on a credit-default swap contract protecting 10 million euros of debt from default for five years is equivalent to 1,000 euros a year. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. An increase signals deterioration in perceptions of credit quality.
–Editors: Michael Shanahan, Paul Armstrong
To contact the reporter on this story: Abigail Moses in London at Amoses5@bloomberg.net
To contact the editor responsible for this story: Paul Armstrong at Parmstrong10@bloomberg.net
This only goes to show that the Markets do not believe a word the Irish Finance Minster says and they just don’t trust him or any of his cronies in the NTMA or NAMA .Despite the denials coming from the Banks and NAMA the huge losses in their Derivative positions will have to be publicly acknowledged sooner or later! We might then get a clearer picture of the scale of the problem, we the taxpayers are expected to solve and the inevitable default on the private debts of the corrupt banks will be the obvious outcome .How many times must I repeat myself ? You cannot fool the Markets Mr.Lenihan!