The theme of the Irish economic rehabilitation continues as the country has successfully staged an auction to sell long-term bonds to investors. This is the first time the island has been able to do such an operation since entering the EU-IMF program in November 2010. In total, €5.2bn was raised, with €4.19bn of that money coming entirely from new investors. It bodes well for the bailed-out nation as they exceed expectations as their target of returning to normal markets by 2013 looks set to be easily accomplished.
After a bond auction that went better than expected earlier in the month, the Irish National Treasury Management Agency (NTMA) were confident that a long-term auction would also pass without a problem. They were proven right as not only were the bonds easily sold, but more than 80% of investors were based abroad, displaying that not only has Ireland confidence in itself but so do the financial experts in foreign countries. The announcement came as a shock to the Irish people as this progress came much faster than expected, with Minster for Finance Michael Noonan describing it as a ”very welcome and positive development.” The bonds are set to mature in October 2017 and October 2020.
The only downside to the auction were the interest rates of 5.7% for the 2017 bonds and 6.1% for 2020 bonds. Although both marks are well clear of the danger mark of 7% which countries such as Spain and Italy are regularly hitting much to the worry of the markets, the rates of 5.7% and 6.1% are unsustainably high, especially for a country of Ireland’s small size.
However such high rates can be expected, particularly since Ireland is not yet in the clear as the eurozone crisis continues to drag on. But the fact that the Emerald Isle is progressing much faster than expected is most welcome given that they were not expected to be making such ambitious movements in the financial markets for at least another six months. In addition to this remarkable news, if the EU totally are serious about abandoning their policy of austerity and follow through with their idea of stimulus, Ireland can expect to be experiencing normal economic times in the near future.