Things seem to be looking worse for the economic situation of Ireland today as interest on Irish Ten Year Bonds has hit a new high of 8.62% up from 7.96% yesterday. Looking at the chart over on Bloomberg, it is a frightening view. This now places Ireland’s bonds 650 basis points above the benchmark AAA German Bundesbank Bonds.
With this new increase, it will mean it will also cost more to insure against default.
Which all together will make it very expensive to borrow money next year, when we run out of money, with or without a budget!
It is obvious that the markets are showing no trust in the current FF/Green Government.But will they change tactics? I don’t think so. Will the markets trust them? Probably not without a General Election.
Businessweek reports that this move of the market also means that it will be more expensive to trade in Irish Bonds as LCH Clearnet are demanding “its clinets place a larger deposit when trading Irish government bonds”.
This has added further pressure to Irish bonds as they are adding 15% to the 5.26% they currently charge.
“This is LCH recognizing that the markets are quite serious about the potential for Ireland to default or restructure,” said Simon Penn, a market analyst at UBS AG in London.
Will Ireland default? Its looking more and more likely.
- No Consenus (stephenspillane.com)
- Irish bonds now 650 bp over bunds (forexlive.com)
- LCH Raises Irish Bond-Trading Margin as Yields Soar (businessweek.com)
- Clearnet Move Pressures Irish Bonds (online.wsj.com)