Monday 26 September 2016

Irish bonds hit 2015 highs as rout continues

Donal O’Donovan

Published 07/05/2015 | 12:30

Traders work on the floor of the New York Stock Exchange. Photo: Reuters
Traders work on the floor of the New York Stock Exchange. Photo: Reuters

Irish borrowing costs moved sharply higher on Thursday, pushing the yield on 10-year Government bonds to 1.49 pc at one stage before settling at around 1.38 pc.

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Irish borrowing costs have more than doubled since the  last week in April, when 10 year bond yields were less than 0.7pc

That is reversing a three year trend and a sign of a more challenging financing and volatile financing environment.

Ireland is among the worst hit countries as bond market investors pull cash out of a market that had seen yields fall to all time lows on the back of mass buying by the European Central Bank (ECB) over the past two months.

Over the past two months the ECB’s quantitative easing (QE) bond purchase programme  has been blamed by investors for distorting markets and eliminating premiums usually paid for risky lending.

The past week has seen as reversal of that trend however, as private investors dumped euro area bond holdings, driving prices lower and yields up.

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