Irish Government Bonds for the retail punter

The number of Irish bonds listed on Degiro is quite limited - I only see 6 instead of the 10 you have listed - maybe it's because of my investor profile

Also, these are all quotes from the Frankfurt exchange and not Euronext Dublin, which is probably the primary exchange for Irish Bonds
 
Same for me - only 6 listed when I search "Irland". However if you type in the ISIN code in the search you should find the others if they list them.
 
There's a 3.4% bond on Degiro (IE00B6X95T99) which matures in 7 months - March 18th, 2024.

Are my sums correct here, 7/12ths of 3.4% returns 1.98% tax free if held until 18th March maturity, or am I missing something obvious.
 
Lisboa said:
There's a 3.4% bond on Degiro (IE00B6X95T99) which matures in 7 months - March 18th, 2024.

Are my sums correct here, 7/12ths of 3.4% returns 1.98% tax free if held until 18th March maturity, or am I missing something obvious.
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3.4% is the 'coupon', or interest payment. That's taxable.
The bit that's tax free is the capital gain if you buy at a discount to par. This is trading at par (price = 100)
 
Frivolous said:
From reading this thread it is still unclear to me if, for an Irish resident, CGT is payable if you sell an Irish Government bond prior to maturity?
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Does anybody know the answer to this question?

I guess, if yield curve is to be believed, rates will peak soon and start dropping off in 24/25. If rates start to drop, the price of these bonds will rise.

So if you buy now at (say) 90 and rates start dropping, one would expect to see the price increase (say to 95). So selling the bond would then give a profit of 5 (95-90). Question is if that gain is then subject to CGT?

Potentially in the above situation you could get a higher return in a shorter period by selling.

Somebody please tell me if I am over thinking this or just plain wrong!
 
I can see the bond market is attracting some new investors. Be very careful guys that you know what you are doing. Especially around the lingo. You need to make sure you fully understand the terminology like yield, yield to maturity, coupon, duration etc. I know everyone is saying that they intend to hold the bond to maturity which is fine but if you are buying a 10 year bond, don't assume you will be able to sell if needed before then without suffering losses. And that's ignoring credit risk.

Buying bonds at a discount is not free money. Otherwise every hedge fund in the world would fill their pockets and go to sleep for a few years.
 
daheff said:
Does anybody know the answer to this question?

I guess, if yield curve is to be believed, rates will peak soon and start dropping off in 24/25. If rates start to drop, the price of these bonds will rise.

So if you buy now at (say) 90 and rates start dropping, one would expect to see the price increase (say to 95). So selling the bond would then give a profit of 5 (95-90). Question is if that gain is then subject to CGT?

Potentially in the above situation you could get a higher return in a shorter period by selling.

Somebody please tell me if I am over thinking this or just plain wrong!
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Please see here:



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Does that part about the bonds being exempt from CAT just refer to situations where both the disponer and donee are non-resident? The referenced Section 81 seems to refer to securities held by people who are non-resident, and says that they are exempt from tax when the donee is a non-resident.
 
Read the first sentence.

If you live in Ireland, and pay tax here, then you do not pay CGT on any gains from disposal or redemption.

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@Protocol : If that was intended for me, thank you for your reply, but I was referring to CAT, not CGT, which is discussed further down in the page that you posted. I was perhaps not clear in my post: I was not disputing what you said about CGT, but asking whether my understanding of what the page (and referenced Act) said about CAT was correct.
 
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CAT Exemptions - Irish Legal Guide

Spousal Exemption There is a complete exemption for gifts or inheritances between spouses and civil partners. This has not always existed. When the CAT was first introduced, spouses were in the equivalent of Group A. As of 30th January 1985, all inheritances became exempted. As of 31st...
legalguide.ie legalguide.ie

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Sunny said:
I can see the bond market is attracting some new investors. Be very careful guys that you know what you are doing. Especially around the lingo. You need to make sure you fully understand the terminology like yield, yield to maturity, coupon, duration etc. I know everyone is saying that they intend to hold the bond to maturity which is fine but if you are buying a 10 year bond, don't assume you will be able to sell if needed before then without suffering losses. And that's ignoring credit risk.

Buying bonds at a discount is not free money. Otherwise every hedge fund in the world would fill their pockets and go to sleep for a few years.
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Sound advice. Buying bonds today will make you a capital gain if interest rates go lower earlier than the market expects. Currently the market expects that interest rates will rise near term before levelling off and then start to fall somewhere in the medium term. If the market is wrong and inflation remains stubbornly high for longer, then bond prices are currently too high and buying now is not a good idea. Getting the timing right is the challenge. IMHO, there will be a great opportunity to make capital gains somewhere in the near future. This hasn't been the case for a long time.
 
Protocol said:
Any help?
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Yes, thank you. Those are quite a bit more readable than the Act itself. It seems like my interpretation was right, except that I was missing that it also applies when the disponer is resident but has held the security for more than 15 years. I can't imagine that there are very many people who hold an Irish government bond for more than 15 years and then wish to gift it/leave it in an inheritance to a non-resident, but perhaps it might be a factor to consider for people who have non-resident children.
 
I have invested in .20% 2027 Bonds at a net 2.5% p.a.
I definitely intend holding to maturity. Therefore the progress of yields is totally immaterial to me - i will receive what it says on the can no matter how the market behaves. To me they are to be compared with 4 year National Solidarity Bond yielding 0.5% p.a.
In any case sale prior to maturity would incur commission.
@daheff you are right that if interest rates follow the yield curve I will for an initial period earn more than 2.5% p.a. but that will be cancelled by earning less than 2.5% p.a. for the remainder of the term. Ignoring expenses then, of course I might expect to earn a higher yield by selling early but what good is that if I have to reinvest at the lower yields that led to the capital gain?
@RedOnion has already made this point somewhat more succinctly.
 
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