Dáil Éireann díospóireacht -
Thursday, 25 Feb 1999

Vol. 501 No. 2

Written Answers. - Government Bonds.

Pat Rabbitte

Ceist:

31 Mr. Rabbitte asked the Minister for Finance his views on trends in the bond market since 4 January 1999; if his attention has been drawn to any change in the demand for Irish Government bonds; and if he will make a statement on the matter. [5440/99]

Minister for Finance (Mr. McCreevy)

Since 4 January 1999 Irish Government bonds have traded satisfactorily as indicated by the yield spreads over German benchmark bonds. In the key ten year area, the spread over Germany on 22 February 1999 was 18 basis points. This was lower than that obtaining in Belgium, Finland, Italy, Portugal and Spain.

As regards the demand for Irish Government bonds, the position in the primary market is that the NTMA is committed to holding, in 1999, ten monthly auctions, excluding January and December. The first such auction was held on 18 February 1999 and was very successful. One hundred and fifty million euro was auctioned in the 6.5 per cent Treasury Bond 2001 and attracted demand of 465 million euro, or over three times the amount auctioned. The average yield of accepted bids in the auction was 3.15 per cent, which was eight basis points over the comparable German bond.

In relation to the secondary market, the Irish Stock Exchange data on annual turnover in Government bonds indicates a marked reduction in 1998. This was attributable to the fact that convergence on Government bond yields between Ireland and Germany had largely occurred by end-1997 and, as a result, certain investors such as spread traders, ceased to participate in the Government bond market – not only in Ireland but in Government bond markets generally in the euro during 1998.