Almost a third of investors in an 11.8 billion euro ($15.2 billion) treasury bond – offering a yield of 4.9 percent with a maturity date in January 2014 – agreed to swap their holdings to a new government bond that offered a 5.15 percent yield due in February 2015; ensuring that at least 30 percent of Ireland’s early debt would be pushed back till a year later.
Accordingly, the government’s funding requirement for January 2014 is now significantly lessen than what it used to be – a particularly important development given Ireland’s desire to exit its bailout programme with the European Union and the International Monetary Fund just a month prior.
Related: Ireland Economy
The island nation withdrew from international bond markets in September 2010 after bond yields had surged above the 6 percent mark. In July last year, yields for Irish bonds reached as high as 18 percent.
But recent positive data in regards to the Irish economy, coupled with the government’s proven ability to meet deficit reduction targets managed to lower interest rates now to more acceptable levels.
Though, the yield demanded by private investors for Irish bonds remains nearly double the cost of Ireland's bailout pact – the EU and the IMF had been charging Ireland an average interest rate of just 3.3 percent for a 67.5 billion euro ($87 billion) credit line – the latest bond swap “reflects substantial demand among investors for our short-dated paper and the resulting decline in yields on Irish paper recently,” said Ireland’s National Treasury Management Agency.
“International investors have taken the view that Ireland has the best chance of emerging from the economic crisis,” he added.