Bond yields climb to 8.17%


IRISH BOND yields nudged higher yesterday despite receiving a slight respite when London clearing house LCH Clearnet reduced the deposit it requires to trade Irish sovereign bonds.

The yield on Irish 10-year government debt rose marginally to just under 8.17 per cent yesterday.

However, the spread over safe haven benchmark German bunds narrowed very slightly from 534 basis points to 531.6 basis points.

The European Central Bank engineered a dip in the soaring borrowing costs of weaker euro-zone states late last week by stepping up purchases of Irish and Portuguese government bonds, according to traders, and hinting it could do more.

Figures issued yesterday showed the central bank bought €1.965 billion worth of government bonds in the week to December 3rd, its biggest weekly tally since the end of June.

However, yield spreads of euro-zone periphery countries such as Portugal resumed their rise yesterday, after narrowing last week.

LCH Clearnet yesterday reduced the deposit it requires bond traders to pay on Irish sovereign bonds to 30 per cent of net positions.

This is down from an emergency level of 45 per cent set on November 25th before the rescue package for Ireland was announced.

The euro fell yesterday as traders took profits from a three-day rally on signs of division over how to contain the euro zone’s fiscal crisis.

The euro’s weak performance came as euro zone finance ministers met under pressure to boost the size of a rescue fund to stop a debt crisis from spreading. – (Additional reporting, Reuters)