Irish and Spanish bond sales could underline move away from ‘periphery’
Irish and Spanish borrowing costs were close to record lows today ahead of planned bond sales that could well cement their move away from the “periphery”.
This is a phrase used to describe the lower-rated and more volatile euro zone bond markets.
Even though political issues are clouding the outlook for both countries, with Spanish coalition talks rumbling on and an uncertain Brexit outcome hanging over Ireland, their debt has been in heavy demand in recent weeks.
Benchmark Irish 10-year bond yields were close to their lowest since December 2017 at 0.495% while Spanish 10-year yields were near a two and a half year low at 0.96%.
Analysts expect to see strong demand as both countries prepare to sell long-dated debt – Ireland in the shape of a 30-year syndicated debt issue and Spain with an auction of five, 10 and 30-year debt.
Ireland has had a Single A rating from all three of the main credit ratings agencies for a while now, and Spain has more recently been upgraded into Single A status by two out of the three; S&P Global and Fitch.
This represents an improvement from the days of the euro zone debt crisis of 2010-2012.
The both countries had needed euro zone bailouts and Spain teetered on the edge of a junk rating and Ireland dropped into the Triple B ratings bucket.
An inconclusive Spanish election earlier this month and questions over the Spanish deficit and the separatist issue in Catalonia have not been a barrier to investor demand for Spanish government debt.
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