Ireland borrows €5bn while Greece flounders
THE Irish Government borrowed €5bn at 1.6pc over German interest rates yesterday, as the cost of Greek government debt ballooned to 2.34pc above German rates.
The euro fell on currency markets as ECB chief Jean-Claude Trichet said there would be no special treatment for Greek banks, and German Chancellor Angela Merkel said concern about Greece's ability to tame its budget deficit is putting the entire euro region "under great, great pressures".
Mr Trichet was announcing the ECB's decision to leave interest rates at 1pc. He signalled that the central bank will wait for more signs of economic recovery before withdrawing emergency measures further.
But he ruled out different arrangements for Greek banks if the country's credit rating should drop below the level which the ECB insists on for collateral from banks receiving loans from the central bank.
"No government, no state, can expect any special treatment," he said. "Some governments -- one in particular -- have very difficult decisions to take. We will not change our collateral policy for the sake of any particular country."
Mr Trichet described Ireland's attempts to cut government borrowing as "quite impressive". But he dismissed as an "absurd hypothesis" suggestions that Greece, or any other country, could be forced out of the euro area.
The National Treasury Management Agency said yesterday's syndicated loan deal showed increased confidence by international investors in Irish government bonds.
Banks and investment funds offered to lend €7bn in total, and 86pc of the €5bn bond issue was taken up by overseas investors.
The bond, which will mature in just under 11 years, will give a yield to the investors of just under 5.1pc. This 1.62 percentage point "spread" over Germany compares with 2.44 points last June.