Foreign buyers snap up Irish government bonds

More than €2bn worth of Irish government bonds were snapped up in February with foreign investors becoming increasingly interested in the State securities.

The total value of outstanding government bonds stood at €122.13bn in February, with those held by non-residents now making up almost 60% of the overall value.

The percentage of Government bond holdings of non-residents climbed to 58.7% from 51.3% a year previous, with the increase principally due to a significant proportion of new Irish government bonds being purchased.

At the end of February, resident holders held more than 41% of long-term Irish government bonds, with resident credit institutions and the Central Bank accounting for nine in every 10 euro of those holdings.

Within the next five years, 31.3% of outstanding Government bonds will mature. More than a quarter of resident holdings fall under this maturity category, while the equivalent figure for non-resident holdings is higher again at 35%.

Furthermore, €28bn of resident-held long-term bonds will mature from 2025 onwards, figures released by the Central Bank yesterday illustrate.

In contrast, only a quarter of non-resident investors fall into this category.

The information released by our national Central Bank follows stats from the European Central Bank (ECB), which show more than €720m in Irish bonds were bought in March as the ECB’s €60bn-a-month bond-buying programme got underway.

The quantitative easing (QE) programme sees national central banks and the ECB buy government bonds in a bid to increase the money supply flowing around the eurozone and individual nations and head-off deflationary pressures.

It is estimated that approximately €13bn of Irish government bonds will be bought under the programme before it expires in September 2016.

Across the eurozone, the ECB hit its €60bn target, with purchases from the currency bloc’s two largest member states predictably accounting for the largest bond-buying exercises.

Approximately €11bn of German bonds were bought last month compared to €8.7bn in French bonds.

The ECB’s 18-month plan — which began on March 6 — is set to pump €1.1tn into the eurozone in what many analysts consider its last chance to ward off deflation.

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