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Cost of State borrowing falls to all-time low on ECB bond signal

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ECB chief Mario Draghi

ECB chief Mario Draghi

Bloomberg

ECB chief Mario Draghi

The State’s cost of borrowing fell to an all time low today after the ECB’s Mario Draghi signalled what is set to be a buying spree on the bond markets.

Borrowing costs are now more than 90pc below the levels seen in the worst days of the crisis.

Yields, effectively the cost of borrowing on the markets, for 10 year Irish Government debt fell to just 1.509pc this afternoon. 

Public utilities like the ESB and potentially Irish Water, as well as the banks, should all be in a position to benefit from the same trend.

Borrowing costs are running at or close to all time lows for many Eurozone countries – in part because investors believe the ECB will buy bonds – and keep prices high and yields, or returns low.

But low bond yields are also a symptom of a weak economy, where money managers don’t anticipate healthy growth.

During a speech on Friday, ECB President Mario Draghi indicated that his bank will do more to try to lift inflation – including buying up assets on the markets – and his comments contained a new sense of urgency about the scale and scope of the move.

Online Editors