UPDATE 2-Ireland sells 2016/18 bonds amid high demand, yields

* Debt agency says to press ahead with monthly auctions

* 2016 avg yield 4.521 pct vs 3.663 pct in April

* 2018 avg yield 5.088 pct vs 4.55 pct in August

* Bid-to-cover ratios around 3 percent

* Next auction scheduled for July 20

(Adds NTMA comment, further analyst comment)

By Padraic Halpin and Marie-Louise Gumuchian

DUBLIN, June 15 (BestGrowthStock) – Ireland said it would press on
for now with its regular monthly bond auctions after selling 1.5
billion euros of debt on Tuesday amid strong demand as investors
attracted by higher yields sought value on the euro zone

The National Treasury Management Agency (NTMA), which has
covered more than 80 percent of its fundraising goal for 2010,
sold 750 million euros of paper maturing in 2016 and 750 million
of debt due in 2018.

The debt agency, which had aimed to raise between 1 billion
and 1.5 billion euros from the tenders, continued a run of
successful syndicated sales and monthly auctions held against a
backdrop of market turmoil.

Bid-to-cover rates were 3.06 and 2.87 respectively,
indicating high demand.

The auction “looks to have found bargain hunting demand, and
should further bolster risk sentiment” towards euro zone debt,
said Credit Agricole rate strategist Peter Chatwell.

But yields rose after a Moody’s downgrade of Greece late on
Monday refocused investor attention on sovereign debt servicing
on the euro zone periphery.

The average yield on the 2016 bond rose to 4.521 percent
from 3.663 percent from the last comparable auction in April and
the 2018 bond to 5.088 percent from the 4.55 percent paid last

“We’re going to remain under (yield) pressure unfortunately,
even though our fundamentals are improving and we have led the
way in terms of fiscal austerity,” Alan McQuaid, chief economist
at Bloxham Stockbrokers said.

“We are being tarred with the same brush as others and I
don’t think that’s going to change any time soon.”

The NTMA said it was satisfied with demand levels at the
auctions in the “very difficult market conditions”, and that
Ireland was in a strong funding position.

“Allowing for other cash balances the Exchequer is fully
funded through end-2010. The NTMA will continue for the time
being its regular series of monthly bond auctions.”

The next auction is scheduled for 20 July.


Like other peripheral euro zone countries, Ireland’s bond
yield spreads widened after the Moody’s downgrade of Greece into
junk territory. The agency cited risks in the euro zone/IMF
rescue package for the debt-laden country. [ID:nLDE65E09O]

The premium investors demand to hold 10-year Irish bonds
over benchmark German Bunds stood at around 292 bps on Tuesday,
above the 190 bps level of the last auction in May and rising
from Monday’s 265 bps.

Ireland passed its first test after euro zone central banks
started buying back bonds to support the market last month,
hitting the top of its target range in May’s auction by selling
1.5 billion euros at only marginally higher costs than before.

The NTMA had considered skipping that auction due to rising
yields, and analysts said the debt agency would try to keep the
monthly auctions on schedule as more Irish banks follow Bank of
Ireland (BKIR.I: ) in launching rights issues. [ID:nLDE657147]

“The NTMA could have skipped (Tuesday’s) auction if they
wanted to but it’s really not about the sovereign at this
juncture, it’s more about getting out the right signal for the
markets to leave the door open for domestic banks to raise
required funds,” McQuaid said.

“Sorting out the banks’ funding is the main game in town.”

Stock Report

(Editing by Jason Webb, John Stonestreet)

UPDATE 2-Ireland sells 2016/18 bonds amid high demand, yields