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THE COST OF BORROWING for the Irish government on the bond markets has fallen today, as investors respond positively to the German constitutional court’s rejection of a complaint which would have killed off a permanent Eurozone bailout fund.
The yield on Irish bonds on the markets – i.e. the interest rate that investors expect to receive in exchange for lending money – has fallen on second-hand bond markets today, just a day before Ireland goes back to the markets to borrow on a short-term basis.
The cost of taking out a 9-year loan stood at 5.44 per cent at 2:45pm this afternoon – the first time since August 2010 that Ireland would have been able to borrow money quite at a rate below 5.5 per cent.
Similarly, the cost of borrowing on a two-year basis – which stood at 2.67 per cent when trading opened – stood at 2.24 per cent, again the cheapest for two years.
Other countries have also seen modest benefits: the cost of a 10-year loan for Italy has fallen to 5.05 per cent, and for Spain to 5.96 per cent. In the latter’s case, borrowing had cost almost 7.7 per cent less than two months ago.
The cost of borrowing for Germany, which has hit record lows in recent months, remains a modest 1.633 per cent – lower than the eurozone rate of inflation, meaning investors are happy to lend to Germany if it means they are guaranteed to at least get their money back after a decade.
Ireland tomorrow hopes to sell off €500 million of three-month treasury bills, in what will be only its third return to the bond markets since borrowing became prohibitively expensive – sending Ireland into an EU-IMF bailout – in late 2010.
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That is a bit of good news, gives us some extra confidence in business circles. I’m sure there will be many ups and downs before we extricate ourselves from this mess. Now its time to tackle our own domestic banks and their extortionate rack rates for business loans. Enda, where is that reconstruction bank you promised? The UK announced theirs yesterday.
Good news indeed although one hopes its not just a temporary thing. The markets sometimes seem to react well to every bit of positive news for a few days before then going back to demanding something else and pushing bond prices back up again when it doesn’t happen. Maybe this news combined with the recently announced plan by Mario Draghi that the ECB would do whatever it takes to preserve the Euro has finally done the job.
Now as Thomas says above we need to get some form of reconstruction/investment bank up and running with whatever small amount is left in the pension reserve fund to try and stimulate growth in the economy. Ultimately it is only solid growth over a couple of years that is really going to get our problems solved because firstly that will produce more jobs and also it will have the effect of reducing our overall level of debt which is still a worry for the longer term.
Look at the trends of recessions over the last 100 years. It happens every quarter. Its the way capitalism works. Who ends up winning? The ‘money men’ hiding in the shadows. Fear and lack of money make people sell and these money men acquire assets at a very cheap price. This is what’s really happening. Most media don’t highlight this or assist the government with their spin. One example that comes to mind are our oil and gas fields. FG, FF and Labour governments gave away our rights for a measly 20% of profits made by the mega rich oil companies. On top of this these mega rich oil companies can deduct all their drilling costs. So we make far less. That’s very nice Pat Rabbitte. Estimates put the value of oil and gas off Irish coasts around 1 trillion. Well done to the shower in government. We the Irish people will get a few peanuts instead
Was listening to this on Tom Dunne. Apparently deal used was brokered by Bertie Aherne & Ray Burke. Can we not renegotiate. €1.6 TRILLION would help our present situation.
Good news.
Let the pro & con comments commence…
What cons are there? We’re that bit closer to borrowing our own money and running our own affairs again!
Exactly David
and it’s all thanks to Fine Gael, well done Enda :-)
Would you stop it’s all down to SF, good on ya Gerry!!
ok, Gerry and Enda… :-D sound…
Beware the hype regarding Ireland’s bond Market “successes”:-
“After all the unattributable spinning, a real person, John Corrigan — the €400,000 (plus) boss of the NTMA — appeared on RTE’s News at One with Sean O’Rourke. Following the build-up of phoney uncertainty, Corrigan surfaced to take a bow. He accepted the plaudits with practised humility. He was “pretty pleased” that the bill had been “substantially oversubscribed”. He was “pleased with the rate”. Indeed, he insisted that the “primary dealers” all say that there was good interest from the traders in continental Europe. John sounded so surprised.
Perhaps there really was interest from overseas. It is difficult to know. There are conflicting views. On Friday, Alan McQuaid, the ace economist who was swooped on and recruited by Merrion Stockbrokers, when Bloxhams went for its tea, told me: “I’d say a lot of it is domestic.”
My guess is that he is right. Back in January, the NTMA attempted to swap bonds due in 2014 for similar products dated 2015.
Despite hopes that foreigners would bite the bait, the issue was supported by native banks — most of them state- owned. Not a hard sell, just a bit of arm-twisting.
We will probably never know what happened behind the scenes, or how much the NTMA spent on spinning a good yarn about last week’s deal. Its inner workings are a secret, still protected from the Freedom of Information Act. It remains unaccountable, a master at behind-the-scenes operations.
Nevertheless as Kinsella put it so eloquently: “You cannot win a PR war with bullshit.”
Shane Ross
This is all very good news indeed, but the next step will be trying to get some kind of credit access flowing to consumers, SMEs and major businesses who have genuine borrowing needs and an ability to pay them back.
All the local business organisations and even the World Economic Forum Competitiveness Index pointing at the serious concerns about lack of access to normal credit lines.
If things like that aren’t addressed very soon, it’s just going to stifle any growth potential all sorts of businesses, including those with major export potential.
This is NOT good news!!!!
There are anti-government luddite moaners on here for the last 2 years who’s position is crumbling by the day with all this news. Soon they will have very little left to moan about !!!!
Its better we are stuck in the shite blaming everyone and everything we can.
~~~~~~
Keep going FG-Lab and ‘never let the bastards get you down’
Great great news!!!!! Ray of light maybe
Surely with Rosanna Davison on the cover of German Playboy, all debts are paid??!!
Good news but what will this mean in relation to the 1 billion we’re handing over to unsecured bondholders next month?
Can we now afford to do that and not cut vital services from health?
Dermot
You’re suffering from repetitive word strain injury and boring everybody with the same crap all the time.
Could you not use one or two of your five brain cells and regard today as a good day and yesterday as………gone!
Yeah whatever padraig, god forbid we ask a few questions of the Fg’ers who flock to the “good news” stories like flies….call me a troll…whatever, at least I have the courage to have a visible and public account and not set up fake profiles like – oh I dunno – Mick Collins here who’s incapable of composing any retort of note just the usual ad hominem crap one expects from coward trolls.
lets hope it continues …
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