Investors and banks across the world have handed the Irish State €1bn in free money and will effectively pay more again to keep it safe, as global markets continued to reel from the fallout of the Covid-19 outbreak.
It came as the National Treasury Management Agency — the State’s debt office — sold €1bn worth of debt that will be repayable in 2029 but at a negative interest rate of 0.15%, marking the cheapest borrowing in the history of the State.
The NTMA auction was something of a silver lining for the Government on the day that economists warned about the severe fallout facing the Irish economy and the thousands of jobs in the tourism and retail industries.
Those jobs are at risk following the travel ban announced by US president Donald Trump and official restrictions brought in here to fight Covid-19.
The €1bn sale came hours before an ECB meeting and a press conference hosted by the eurozone central bank’s president, Christine Lagarde, that was widely slammed as failing to reassure investors.
European stock markets subsequently had their worst day in history, with Ireland’s Iseq index of shares slumping by a further 10%.
Airline shares, including those of IAG, owner of Aer Lingus and British Airways, ended over 15% lower.
The disappointing ECB press conference also triggered a sell-off in the sovereign bonds of European peripheral countries, triggering memories of the financial crisis.
- The HSE have developed an information pack on how to protect yourself and others from coronavirus. Read it here
- Anyone with symptoms of coronavirus who has been in close contact with a confirmed case in the last 14 days should isolate themselves from other people - this means going into a different, well-ventilated room alone, with a phone; phone their GP, or emergency department - if this is not possible, phone 112 or 999 and in a medical emergency (if you have severe symptoms) phone 112 or 999
Yields on many government bonds across the eurozone still pay negative interest rates as investors pull money from stock markets and buy government bonds, amid fears over the economic fallout from Covid-19.
“It is extraordinary,” said Richard Flood at Brewin Dolphin Ireland, of the NTMA debt auction. Investors were paying the Irish State to take their money and “the key reason anyone would want to do this is that they are looking for safety”.
Economist Jim Power said the hit facing the tourism and retail industries here will effectively lead to a short-term recession “as most people would understand it”.