Ireland auctions treasuries with negative yields for the first time
Ireland on Thursday auctioned short term treasury bills at a negative yield for the first time, following moves by Germany as the European Central Bank bond-buying scheme gets well underway.
Thursday’s bill auction attracted significant interest with total bids of €1.965bn received, 3.93 times the amount on offer.
Ireland’s remarkable recovery since being one of the main protagonists in the Eurozone debt crisis is reflective in the decline in its borrowing costs.
The country’s efforts to implement austerity allowed it to return the Eurozone bond markets, unlike peer Greece. As such, traders have been snapping up Irish bonds, seeking value in an undervalued asset.
That, together with the ECB’s stimulus programme, has seen Irish bill and short-term bond yields being sold in negative yields for the first time at an auction.
The Irish National Treasury Management Agency borrowed €500m through a sale of bills maturing in half a year, at an average yield of minus 0.01%. At the last half-year bill auction in January the yield was zero, and a year ago it was 0.2%.
Ireland, like Germany is now raising money at negative interest rates as investors are prepared to buy negative yield bonds because this works out be less costly to them than putting money on deposit at the ECB, which now levies a small cost for taking on such short-term deposits.