Bond rate suggests Ireland improving

[toughbutfair]

Todays bond issue which raised 5bn was priced at 1.6% over the German rate, the spread was 2.4% in June.

This suggests the cuts in the budget has put us in better shape as a 33% decline the spread is great progress.

[Son_Of_The_Republic]

Given low interest rates only mugs will be buying into Bonds/government debt.

[seenitallb4]

Todays bond issue which raised 5bn was priced at 1.6% over the German rate, the spread was 2.4% in June.

This suggests the cuts in the budget has put us in better shape as a 33% decline the spread is great progress.

That's a fairly major improvement. It should make us even more resolved to cut wasteful spending.

[The Caped Cod]

That's a fairly major improvement. It should make us even more resolved to cut wasteful spending.

And ther in lies the problem. It seems like it' the wasters who decide.

[Conor]

Todays bond issue which raised 5bn was priced at 1.6% over the German rate, the spread was 2.4% in June.

This suggests the cuts in the budget has put us in better shape as a 33% decline the spread is great progress.

That's rather specious reasoning. Post-hoc ergo propter hoc?

The 10-year spread on the 1st October last year was 156bp, it's 163bp now. What does this suggest about the cuts in the budget, by your rationale?

[Conor]

Given low interest rates only mugs will be buying into Bonds/government debt.

Yes, the gutsy, ballsy investors are all buying into property now.

[Cassandra Syndrome]

The premium investors demand to hold Irish 10-year government bonds over German debt widened 7 basis point to 151 basis points, the most since Jan. 6, based on closing prices.

Ireland plans to sell bonds in euros that may have a maturity of October 2020, with banks managing the sale, according to a banker involved in the transaction. The bonds may yield 145 to 150 basis points more than the benchmark mid-swap rate, a banker said.

Concerning sovereign debt in general,

But the party is over, and many investors will have to face up to what is already being touted as the next stage of the global financial crisis, which has moved from Wall Street (the banking sector) to Main Street (the broader economy). It is now rolling into Downing Street, or the national equivalent elsewhere.

Comment: Soverign defaults ? ask now or pay later

[toughbutfair]

That's rather specious reasoning. Post-hoc ergo propter hoc?

The 10-year spread on the 1st October last year was 156bp, it's 163bp now. What does this suggest about the cuts in the budget, by your rationale?

I hadn't know the October spread - the story on rte.ie only referred to the June one.

Assuming your figure is correct, we are a bit worse off than in October but much better off than June.

[DCon]

more info below:

Jan. 14 (Bloomberg) -- Ireland sold 5 billion euros ($7.3 billion) of bonds through a group of banks as it seeks to diversify its funding to help plug a budget deficit that’s nearly four times the European Union’s limit.

The nation priced the notes due October 2020 to yield 150 basis points more than the benchmark mid-swap rate, according to a banker involved in the transaction.

“Ireland has come at a good level, offering investors a moderate new-issue premium,” said Padhraic Garvey, head of investment-grade debt strategy at ING Groep NV in Amsterdam. “The fact there was good demand shows investors are more comfortable with the Irish story and the credit risk.”

The cost of protecting Irish government bonds using credit- default swaps was unchanged, with contracts at 155 basis points, according to CMA DataVision prices at 10 a.m. in London. That means it costs $155,000 a year to insure against losses on $10 million of the nation’s bonds for five years.

The difference in yields, or spread, between 10-year Irish government bonds and benchmark German debt widened 5 basis points to 156 basis points, Bloomberg data show. It expanded to as much as 284 basis points in March 19, 2009, the biggest gap since the inception of the euro in 1999. A basis point is 0.01 percentage point.

Ireland Sells Bonds Via Banks to Ease Budget Deficit (Update1) - Bloomberg.com

[Andrew49]

Municipal bonds are debt instruments issued by local authorities to finance investment projects. Yesterday’s announcement by government of a Recovery bond is a variant of the municipal bond idea, but on a national level. Cash-strapped local authorities can use funds generated by municipal bond issues on a yearly basis to reduce their infrastructural deficits in transport, water provision, port equipment, broadband provision, and community initiatives. Ireland’s regions can compete on the quality of our infrastructure, rather than on direct wage competition. Dealing locally but funded centrally to deal with extremely poor infrastructural provision with broadband, hospitals-both public and private, roads, amenities, playgrounds, local housing, homeless initiatives, and regeneration projects. Individuals can use municipal bonds in order to save and invest, or to fund their pensions, ensuring a guaranteed rate of return on their savings. Local authorities can respond to the needs of citizens directly using these bond issuances.

Ireland’s recent flooding has exposed three painful facts.

First, increased flooding as a result of climate change is inevitable. This 1 in 800-year event will be probably be seen again inside a decade. It should be remembered the flooding of 2008 broke all previous records in Dublin and Cork.

Second, public services were not equipped to stop the flooding from occurring or to deal with the floods once they had occurred.

Third, the government cannot pay for the cleanup operation, which may cost a half a billion Euros. In simple terms we need the infrastructure, we cannot go forward with the risk of recurrence unmitigated, and yet we equally can’t afford to pay for the improvements, it is a considerably difficult position to find oneself in nationally.

Ireland’s local authorities are underfunded, and have been systematically underfunded for decades. The current economic climate means Ireland will reduce its capital spending provision for several years on many crucial projects of long-term national importance, like flood prevention infrastructures, environmental cleanups, broadband provision, roads, port systems, and many more.
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Municipal bonds are most developed in the US. Build America just increased and re-issued their tax-efficient subsidised debt product to the tune of 56 billion. The bond market in the US is currently thriving.

The State of Oregon is a prime example of municipal bond usage. Municipal bonds are very safe and historically have had a very low default rate. They are appropriate as a pension vehicle and also as a savings and investment vehicle.

Source to full article

It's an interesting read and it would take me a few weeks to absorb it all but I'm sure there are more qualified people on these boards who can help my education on Municipal bonds.