Irish bond yields hit new high


Irish bonds yields passed the 7 per cent mark this morning in early trading before falling back. This marked a new peak since the bonds crisis began.

The yield on Ireland’s 10-year bonds stood at 706 basis points (7.06 per cent) by 8.48am after closing at 668 basis points yesterday. However, by 1.30pm bond yields had retreated to 682 basis points and they closed at this level.

The spread between Irish sovereign debt and the benchmark bund rose to 447 basis points after closing at 412 basis points last night. The spread stood at 425 basis points.

The spread over the Portuguese yield this morning has widened by over 100 basis points.

Bond prices have spiked following the collapse of Portugal's budget discussions and Greece's tax revenue shortfalls reignited concerns that peripheral European countries may struggle to cut their deficits.

Ireland was the second worst performer in Europe yesterday, after Greece, in terms of widening spreads.

Greece’s 10-year yield rose 79 basis points, the most since June 15th, and its spread with bunds widened to 779 basis points, the highest in more than three weeks. The yield on Portugal’s 10-year bond increased 24 basis points yesterday, the most since September 20th. That left it at 328 basis points, up from 312 earlier in the day.

Yesterday news agency Bloomberg reported that bond investors were losing faith in Ireland’s plan to lower the deficit as spending cuts threaten to undermine economic growth, reducing Government revenue.

The report quoted Ralf Ahrens, head of fixed income at Frankfurt Trust, as saying there was a danger for countries such as Ireland with huge deficits that cutting spending would not be enough and the situation would deteriorate.

Additional reporting Bloomberg