Irish Debt Rises for First Day in 14, Bund Spread Narrows on G-20 Talks - Bloomberg

Irish government bonds gained for the first day in almost three weeks as Group of 20 leaders held emergency talks on the nation?s fiscal crisis.

The nation?s 10-year bond yield pared a two-day surge of more than 1 percentage point, and the difference, or spread, over German debt of similar maturity fell back from yesterday?s record. European finance ministers said plans for a new system to handle euro-region debt crises won?t apply to outstanding debt. Ireland?s gross funding need for 2011 will be 23.5 billion euros ($32 billion), falling to 18.6 billion euros in 2014, the nation?s debt agency said.

?In this climate of fear, the G-20?s statement offered some support for Irish debt,? said Luca Jellinek, head of European interest-rate strategy at Credit Agricole Corporate & Investment Bank in London. ?The market is trading on signals of political solidarity, or lack thereof. The Irish funding announcement was a little bit lower than expected.?

The advance snapped the longest losing streak in at least three years. The yield on the Irish 10-year bond fell 36 basis points to 8.76 percent at 9:22 a.m. in London, the first drop in 14 trading days. The 5 percent security maturing in October 2020 rose 1.89, or 18.9 euros per 1,000-euro face amount, to 75.71.

The German 10-year yield rose one basis point to 2.44 percent.

?New Mechanism?

?Any new mechanism would only come into effect after mid- 2013 with no impact whatsoever on the current arrangements,? the ministers of Germany, France, Italy, Spain and the U.K. said in a statement distributed to reporters in Seoul today during the Group of 20 summit.

Ireland?s funding requirement includes 3.1 billion euros of banks? promissory notes, the National Treasury Management Agency said in a presentation on its website dated yesterday. The funding need will be 20.7 billion euros in 2012 and 18.9 billion euros in 2013, according to the presentation.

While Ireland is fully funded until the middle of next year, the extra yield investors demand to hold Irish 10-year government bonds rather than German bunds, the euro-region?s benchmark security, reached a record 652 basis points yesterday. The spread narrowed 40 basis points to 606 basis points today.

Italian bonds fell before the nation sells as much as 8.25 billion euros of 2015, 2026 and 2034 debt today. The declines pushed the 10-year Italian yield as much as 190 basis points above bunds, a euro-era record.

To contact the reporter on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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