Wednesday

24th Aug 2016

Markets snap up EU bonds for Ireland in first attempt to raise cash

  • Portugal's debt issuance did not meet with the same fortunes as the EU-level bonds (Photo: 1suisse)

Investors have snapped up the first set of bonds issued by the European Union in its efforts to raise cash as part of an €85 billion bail-out of debt-encumbered member state Ireland.

A €5 billion, five-year issuance sold out in one hour on Wednesday (5 January), according to the European Commission, which was pleased to see that demand had been three times what was being offered.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

The sums were raised under the rubric of the European Financial Stablisation Mechanism (EFSM), guaranteed by the EU budget. The EFSM is to deliver €22.5 billion to Ireland as part of the broader €85 billion aid package.

The larger €440 billion-strong European Financial Stability Facility is to put up its first bonds for sale later this month, a move that will also raise cash for the embattled island.

The interest rate demanded for the sums was 2.59 percent. The rate the EU will lend the funds on to Ireland however will be 5.51 percent, with the difference to be invested back into the EU budget.

While the EU-level bonds sold out within minutes, a debt issuance by Portugal met with different fortunes.

Lisbon's debt auction of €500 million in six-month treasury bills saw the yield climb to a record 3.686 percent, up from 2.045 percent in its last such sale.

In related news, China's vice premier, Li Keqiang, announced during a visit to Madrid, that the Middle Kingdom is to purchase €6 billion in Spanish debt.

He said the country would be "a responsible, long-term investor" that will be with Spain "in both the joys and the sorrows."

Both Portugal and Spain are next on the hitlist of the 'bond vigilantes' demanding high interest rates on government debt from eurozone states after Ireland was forced to accept a bail-out.

Column / Brexit Briefing

Brexit prompts trade limbo

Brexit has landed EU trade policy, as well as the UK, in limbo land. At least one trade deal has already been put on ice, and others may well follow.

Stakeholders' Highlights

  1. HuaweiMaking Cities Smarter and Safer
  2. GoogleHow Google Makes Connections More Secure For Users
  3. EGBAThe EU Court of Justice Confirms the Application of Proportionality in Assessing Gambling Laws
  4. World VisionThe EU and Member States Must Not Use Overseas Aid for Promoting EU Interests
  5. Dialogue PlatformInterview: "There is a witch hunt against the Gulen Movement in Turkey"
  6. ACCAACCA Calls for ‘Future Looking’ Integrated Reporting Culture With IIRC and IAAER
  7. EURidNominate Your Favourite .eu or .ею Website for the .EU Web Awards 2016 Today!
  8. Dialogue PlatformAn Interview on Gulen Movement & Recent Coup Attempt in Turkey
  9. GoogleA Little Bird Told us to Start Tweeting About Google’s Work Across Europe. Learn More @GoogleBrussels
  10. Counter BalanceThe Trans Adriatic Pipeline: An Opportunity or a Scam in the Making for Albania?
  11. Counter BalanceThe Investment Plan for Europe: Business as Usual or True Innovation ?
  12. Belgrade Security ForumMigration, Security and Solidarity within Global Disorder: Academic Event 2016