IRISH BONDS slid, driving 10-year yields higher for the second consecutive day, as the Government won permission to raise the amount of capital it can inject into Anglo Irish Bank to more than what was requested in June.
The declines sent the yield premium, or spread, investors demand to hold the securities instead of similar-maturity benchmark German debt to the highest in more than two weeks.
“There have been some bad headlines about Ireland’s banking sector and its fiscal outlook,” said Pádhraic Garvey, a fixed-income strategist at ING Group in Amsterdam. “Irish bonds have held up remarkably well until now.”
The yield on the 10-year Irish bond jumped 15 basis points to 5.25 per cent in London. The two-year note yield rose six basis points to 2.80 per cent.
The Irish-German 10-year yield spread widened 14 basis points, or 0.14 percentage point, to 264 basis points, the most since July 23rd.
Standard and Poor’s said on it was keeping its ratings on Anglo Irish on credit watch with negative implications. SP has a BBB ranking for the bank’s debt, the second-lowest investment grade.
“The market seems to be catching up on negative news, perhaps using the upcoming bond sale as an excuse to sell,” said Mr Garvey. The National Treasury Management Agency is scheduled to sell 2014 and 2020 bonds on August 17th.
The Portuguese-German 10-year spread widened five basis points to 253 basis points, the most since July 26th. The Spanish yield difference with German bunds increased two basis points to 153 basis points. – (Bloomberg)
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