Friday 17 November 2017

Borrowing costs ease to 8.15pc as rescue package rumours still rife

Donal O'Donovan

Donal O'Donovan

IRELAND'S borrowing costs eased slightly yesterday as talk about a potential bailout continued to swirl around the financial markets.

The yield -- or interest charged -- on Irish 10-year bonds eased to 8.15pc yesterday, the lowest yield since November 9.

Credit analyst Brian Barry of Evolution Securities in London said the market had been surprised by the strength of the government denials of claims it was close to a bailout.

"Building it up to more than it is and calling it a loss of sovereignty probably makes this a harder sell to the public. But it illustrates the government mindset," he said.

Despite the denials, he said the market was convinced a rescue package was available.

Ireland is under pressure to take the funds from EU leaders, who fear volatility in Irish bonds will spill over into other markets if the situation is not calmed.The Government wants to avoid the bailout and has no immediate borrowing requirements.

The balance of power may be with Europe, however.

"Irish banks have received €130bn from the European Central Bank to keep the banks afloat, that's the leverage that Europe has," Mr Barry said.

The cost of insuring Irish bonds in case they default also remained high despite repeated denials that a bailout was on the way. Analyst Gavan Nolan of Markit said there had been a slight fall in the cost of insuring bonds because the market believed Ireland would accept the EU funds.

Irish Independent

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