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John McHale: Investors are starting to like us again but we've got to do more

What a difference a year makes. On July 13, 2011, the eight-year bond yield -- a current key benchmark -- peaked at 15.6pc. This week the yield has hovered around 6pc. Taking advantage of the lower yields, in late July of this year the National Treasury Management Agency (NTMA) made a return to the international bond markets, placing €5.2bn of five- and eight-year bonds at an average yield of 5.95pc, with reported strong interest from influential US-based investors.

Although it is not straightforward to infer perceptions of default risk from observed bond yields, a standard calculation puts the implied probability of default over the rest of the decade at 83pc in July 2011 and 52pc today. (This calculation assumes risk- neutral investors, a total recovery rate of 50pc in the event of a default, and treats observed German yields as providing the "risk-free" rate.)