Irish Government Bonds for the retail punter

D

Duke of Marmalade

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Probably covered elsewhere, in which case would a kind mod please delete.
0% Treasury 2031 is currently priced at 80.67.
Am I correct that a retail punter would get get the 10.33 redemption gain free of CGT>
If so this certainly beats any State Savings though I accept not quite as guaranteed as you would be treated the same as the big girls on a default.
All the same, worth considering.
How would a retail punter get their hands on some of this stuff?
 
6 figure sum in savings certs?
Why!?!

Anyway, some info on brokers and charges in this thread...

What is the minimum to hold in Irish Government bonds that pays more than a deposit account after stockbroker fees are deducted

I am thinking of moving a deposit into short term Irish Government bonds. I presume I have to open an account with stockbrokers. What would their fees be for buying €100,000 of bonds? At what level is it better to hold bonds instead of a deposit account?
www.askaboutmoney.com
 
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ClubMan said:
6 figure sum in savings certs?
Why!?!

Anyway, some info on brokers and charges in this thread...

What is the minimum to hold in Irish Government bonds that pays more than a deposit account after stockbroker fees are deducted

I am thinking of moving a deposit into short term Irish Government bonds. I presume I have to open an account with stockbrokers. What would their fees be for buying €100,000 of bonds? At what level is it better to hold bonds instead of a deposit account?
www.askaboutmoney.com
Click to expand...
At the time they compared very favourably with deposits and Govie bonds at 0% interest.
 

What is the minimum to hold in Irish Government bonds that pays more than a deposit account after stockbroker fees are deducted

I am thinking of moving a deposit into short term Irish Government bonds. I presume I have to open an account with stockbrokers. What would their fees be for buying €100,000 of bonds? At what level is it better to hold bonds instead of a deposit account?
www.askaboutmoney.com

From Basilbrush: I asked, and the fees for execution-only Irish government bond purchases through Goodbody are apparently 0.35% (at least for a fairly large purchase), plus the annual fee of €246 (including VAT).


Purchase 80,670 euro of 0% 2031 bonds
Earn zero interest.
Repaid at par 100,000 in Oct 2031, that is 8.5 years away.
Receive a tax-free capital gain of 19,330.

Pay 282 commission.
Pay 246 each year 2023 to 2031 = 9*246 = 2214
Fees = at least 2,500


Maybe buying DE zero coupon bonds on DeGiro would be better, due to really low fees, except they are not exempt from CGT.
 
Just for completion so that we can calculate the net return, is there a charge to sell also?
 
Probably (and I think if you sell before maturity then you do have to pay CGT on any capital gain), but if the plan is to hold until maturity then I imagine that there would be no charge at the end as you will not be selling.
 
The rate of rate on this investment is about 2.5% - not sure this is an attractive investment as you have to lock away the € 80k for 9 years
 
jpd said:
The rate of rate on this investment is about 2.5% - not sure this is an attractive investment as you have to lock away the € 80k for 9 years
Click to expand...
Certainly better than the National Solidarity Bond which is for 10 years and pays 1.5% AER. Though one is a bit more protected against further rises in rates as you can cash-in and re-enter. Also I think de facto, if not de jure, State Savings are more protected in the event of sovereign default. It would be a very bad situation indeed if the State had to welch on the widows and orphans.
 
I can see three Irish bonds listed on DeGiro -
DeGiro say the fees depend on the exchange - could be wrong but this document indicates for Frankfurt it might be 5e + 0.05% custody fee (that custody fee is per annum - I guess) https://www.degiro.fi/helpdesk/sites/fi/files/2021-06/Hinnasto_CUSTODY.pdf

Possibly DeGiro show just these three funds because some customers have asked specifically for them

IRLAND 09-25 IEOOB4TV0D44 105.47
IRLAND 2030 IEOOBJ38CR43 98.89
IRLAND 2045 IEOOBV8C9186 81.25

Irland, Republik 5,4% 09/25 Bond | A1ANNQ | IE00B4TV0D44 | Price

Irland, Republik 5,4% 09/25 price in real-time (A1ANNQ / IE00B4TV0D44) charts and analyses, news, key data, turnovers, company data.
www.boerse-frankfurt.de www.boerse-frankfurt.de

Irland, Republik 2,4% 14/30 Bond | A1ZR7B | IE00BJ38CR43 | Price

Irland, Republik 2,4% 14/30 price in real-time (A1ZR7B / IE00BJ38CR43) charts and analyses, news, key data, turnovers, company data.
www.boerse-frankfurt.de www.boerse-frankfurt.de

Irland, Republik 2% 15/45 Bond | A1ZVUJ | IE00BV8C9186 | Price

Irland, Republik 2% 15/45 price in real-time (A1ZVUJ / IE00BV8C9186) charts and analyses, news, key data, turnovers, company data.
www.boerse-frankfurt.de www.boerse-frankfurt.de
 
Looking at the Frankfurt stock exchange website, all of the Irish government bonds in fact seem to be listed there, including the 0% 2031 one that some people are interested in (https://www.boerse-frankfurt.de/bonds/search with Issuer as Irland, Republik). They conveniently even provide a link to buy it through your broker (the euro symbol with the green background, to the right of the bond), and DEGIRO is one of the options. Would someone who has a DEGIRO account like to try clicking on the link to see what happens? Somewhat concerningly, however, there seems to be zero or almost zero turnover in most of the bonds, which makes me wonder if liquidity would be a problem.
 

Irland, Republik 0,000% 21/31​

ISIN: IE00BMQ5JL65 | WKN: A287F6 | Symbol: - | Type: Bond


Not found after searching on DeGiro.
 
It's an awful pity these bonds aren't on DeGiro.

I have a feeling there are a good few people who would go for 26-27% tax free return over 8.5 years, more or less risk-free



1680210057806.png
 
basilbrush said:
Probably (and I think if you sell before maturity then you do have to pay CGT on any capital gain), but if the plan is to hold until maturity then I imagine that there would be no charge at the end as you will not be selling.
Click to expand...
This is from the Revenue website:
Revenue said:

What is exempt from CGT?​

Gains on the transfer of certain assets are exempt from CGT. You do not have to pay CGT on gains you make on the disposal of certain assets.

You do not need to pay CGT on gains from:

  • betting
  • lottery wins
  • prize bonds
  • sweepstakes
  • bonuses under the National Instalments Savings Scheme
  • government stocks
  • certain life assurance policies
  • moveable property (such as furniture), where the gain does not exceed €2,540
  • animals
  • private motor cars.
Click to expand...
So gains are tax free on sale as well as maturity. Now it is not clear whether "government" refers to the Irish government or to any government. I would have thought that it would need to at least include any EU government.
 
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Explanatory Memorandum said:
607 Government and certain other securities
Summary This section provides for the exemption from capital gains tax of Government and certain other public securities. The following are not chargeable assets — (1) • securities (including savings certificates) issued under the authority of the Minister for Finance,
...
• securities issued in the State, with the approval of the Minister for Finance, by the European Community, the European Coal and Steel Community, the International Bank for Reconstruction and Development, the European Atomic Energy Community or the European Investment Bank
Click to expand...
So other than that last category it seems to only apply to Irish Govies.
 
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