Ireland Sells First 100-Year Bond, Staying on Comeback Trail

  • Nation's debt office issues sovereign debt at yield of 2.35%
  • Ireland follows Mexico in finding investors for `century' bond

Ireland sold its first so-called century bond, less than three years after it regained economic sovereignty by exiting an international bailout program.

The nation’s debt office sold 100 million euros ($113 million) of the securities at a yield of 2.35 percent. By contrast, investors are demanding a yield of 2.66 percent to lend to the U.S. government for 30 years.

With the nation in the midst of commemorating the centenary of the 1916 rebellion that eventually led to Ireland’s breaking from the U.K. in 1922, Ireland is seeking to lock in lower borrowing costs amid the European Central Bank’s unprecedented stimulus. Last year, Mexico sold the world’s first 100-year government notes in euros.

The sale “is both a testament to the restored confidence markets have in Ireland’s creditworthiness, as well as a sign that duration- and yield-hungry investors are looking to extend to the max along the curve,” said Owen Callan, a fixed-income strategist at Cantor Fitzgerald LP in Dublin.

Irish borrowing costs have plunged since it exited an international bailout at the end of 2013, aided by a recovering economy and ECB President Mario Draghi’s pledge to do whatever it takes to save the euro.

The yield on Ireland’s benchmark 10-year bonds peaked at 14.2 percent at the height of its crisis in 2011. The yield on the securities has since fallen to below 1 percent and was at 0.73 percent as of the 5 p.m. London close.

The ECB has begun a second year of buying sovereign debt, part of a stimulus plan that includes imposing negative deposit rates for banks, which have served to crush yields across the eurozone. In Germany, bonds maturing in as long as eight years have yields below zero.

Supply Target

In December, the debt office said it would seek to sell 6 billion euros to 10 billion euros of bonds in 2016. Wednesday’s sale was by private placement through Goldman Sachs Group Inc. and Nomura Holdings Inc.

“This ultra-long maturity is a significant first for Ireland and represents a big vote of confidence in Ireland as a sovereign issuer,” Frank O’Connor, the Dublin-based sovereign issuer’s director of funding and debt management, said in an e-mail statement.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE