THE PRICE OF BORROWING to the Irish government has remained largely unchanged in the wake of this morning’s auction of €1.5bn in government bonds – but it remains vastly higher than its rate before last week’s surges.
The price of 10-year bonds fell from its opening 6.482% to 6.327% just as the bid window for the NTMA’s debt was closing, and dropped to 6.239% just as the results of the auction were beginning to arrive.
The yield has inflated again somewhat in the meantime, but has remained between 6.25% and 6.3% for the remainder of the day, finishing at 6.291%.
The spread between the price of Irish and German 10-year bonds had contracted to 380bps earlier in the day but lay just short of 384bps as the markets closed.
The price of four-year bonds has been reined inward too, with the markets closing on 4.751%, a small discount on the 4.767% for which the bonds were sold this morning.
Eight-year bonds, meanwhile, closed at exactly 6% – having sold this morning for 6.023%.
In relative terms, the ten-year bond shed almost 3% of its price over the day, while the eight-year bond lost 3.75% and four-year paper a whopping 5%.
All of their closing values, however, are higher than any price achieved prior to last week’s surge in the wake of ongoing uncertainty about the final cost of winding down Anglo Irish Bank.
By international comparison, Greek 10-year bonds fell by 2.65% in relative terms to end the day at 11.254%, while Portuguese bonds – which had began the morning moving almost in perfect concert with Ireland’s – fell just 1.36% in real terms.
The yield on German 10-year bonds fell to 2.458% – a relative drop of 0.38%.
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