Irish Sells 10-Year Bond at Record-Low Yield as Election Nearsby
Irish debt office sells $1.1 billion of bonds before vote
Irish-German bond spread widens before Feb. 26 election
Ireland auctioned 1 billion euros ($1.1 billion) of 10-year bonds at a record-low yield, even as the nation risks adding to political turmoil in Europe with an inconclusive election result later this month.
The National Treasury Management Agency sold the notes due in May 2026 to yield 0.999 percent compared with 1.156 percent a month ago when it sold 3 billion euros of the same bonds in a deal marketed by a group of banks. The sale in Dublin on Thursday drew 1.8 billion euros of bids, the debt office said.
“Portugal, Italy and Spain have all struggled this week,” said Ryan McGrath, head of fixed-income strategy at Cantor Fitzgerald LP, in a note before the auction. “Ireland is, by far, a superior credit to the peripheral names.”
With less than three weeks left to Feb. 26 election, Irish Prime Minister Enda Kenny is campaigning on a platform of maintaining stability, coupled with his record of winning back the trust of international investors. Similar messages failed to work for governments in Spain and Portugal, which lost their majorities in elections over the past six months. By contrast, Kenny is on track to be re-elected, polls and odds show, though he may need help to keep a hold on power.
While Fitch Ratings upgraded Ireland by one level to A last week, it warned an inconclusive result to the election poses downside risk to the nation’s finances. The spread between Ireland’s 10-year benchmark government bonds and German securities of a similar maturity has increased to 85 basis points, the widest since July, from 44 basis points just under a month ago.