The National Treasury Management Agency (NTMA) said today that its auction of bonds was a success despite the credit rating downgrade on Tuesday by Standard & Poor's.  The interest rate spread over German bunds on 6 month bond was 1.598%.

Two Treasury bond lines were offered in the auction with maturities of six months and eight months and a target issuance range of €400m to €600m. Total bids were received for €3.7bn (bid-to-cover ratio 6.1 times) and it was decided to issue a total of €600m; €200m of 6 month bonds and €400m of 8 month bonds.

The interest rate for the 6-month bonds was 1.978% and it was covered 10 times while the interest rate on the 8 month bonds was 2.348% and it was covered 4.1 times. However in both cases, th interest rates were under 0.5 points lower than in the last auction on August 12th.

The Wall Street Journal said today that investors should keep in mind that the market is largely re-hashing old news and fears about Ireland’s banks and finances. As Richard Barley of WSJ’s Heard on the Street team points out, it’s not really Europe-centric issues that are driving the latest jitters, but rather, fears about the US economy.

Today's yield is 0.38% and its interest rate or coupon is 0.0%.

The yield on Irish 10-year bonds rose above 5.4% today, second only to Greece in the Eurozone and compared with the German 10-year bund rate of 2.25%.

As fears of a double dip recession grow, investors are moving into safe assets like US Treasurys and German bunds, pushing these countries’ borrowing costs dramatically lower (when an existing bond with a fixed interest coupon rises in value because of market demand, its so-called yield falls as the unchanged fixed interest payment is related to the higher value of the bond).

This trend, in turn, is making countries on the periphery of the Eurozone look bad. However, at the same time, this makes Irish and Portuguese bonds more attractive to investors searching for more yield.