Mubasher: Ireland has raised EUR 4 billion in bonds on Wednesday at a negative yield of -0.008%.
The new bond issue, which attracted north of EUR 10 billion in demand, will enable the Irish government to replace several loans taken under its 2010 international bailout.
A negative yield means investors are willing to lose money in order to lend Ireland.
In September, Ireland said it was looking to repay EUR 5.5 billion of bailout loans ahead of schedule in the hopes of saving around EUR 150 million. The bailout loans were provided by the International Monetary Fund (IMF), Denmark, and Sweden.
“[Wednesday’s] transaction has the advantage of maintaining flexibility around our future funding requirements and taking advantage of debt service cost savings,” said Frank O‘Connor, funding director at Ireland’s debt office, in a statement to Reuters.
The new bonds are “far below the 1.05 percent interest rate Ireland said its residual IMF loan balance carried last year,” according to Reuters.
Negative yields are not uncommon in Europe, particularly after the European Central Bank (ECB) flooded the bond market with its EUR 60 billion per month bond purchase programme.
Thus far, Ireland has repaid most of its EUR 22.5 billion in loans from the IMF, which were originally part of a EUR 85 billion bailout package.
The European currently has only EUR 4.5 billion left; however, it still has to repay EUR 600 million and EUR 400 million to Sweden and Denmark, respectively.
