Irish long-term debt auction sees strong demand

The Irish Treasury got off €1.0bn in 10-year debt at a record low yield on Thursday in the face of election uncertainty, amid a recent sharp increase in demand for those sovereign bonds deemed safest by investors.

Ireland's National Treasury Management Agency auctioned the May 2026 notes at a yield of 0.999%, versus the 1.156% seen the last time around, about a month ago.

Investors put in €1.8bn worth of bids.

Irish reform efforts in the aftermath of the Great Financial Crisis have been rewarded by international investors with lower funding costs when compared with their peers on the Eurozone periphery, such as Spain, Portugal or Greece.

Nevertheless, last week ratings agency Fitch cautioned that an inconclusive result to the country's elections on 26 February would pose downside risks.

Incumbent Prime Minister Enda Kenny was campaigning on a platform of sustaining financial stability in the country, a message that did not go down well enough with the austerity weary Spaniards and Portuguese at their own latest national elections.

Polls indicated Kenny's party might need the support of others to remain in power.

To take note of, the country's risk-premium, measured as the difference between the yield on its benchmark government bond and that on German debt of a similar maturity, was at 85 basis points at last count, versus 44 less than a month ago, according to Bloomberg data.