Irish sovereign debt interest rate spreads

| 31 October 2008 09:30

When the Euro was formed, bond traders looked askance at Southern European sovereign debt, which trade at a considerable premium to debt from Germany, France and the Netherlands. In those days, the Southern European countries developed the offensive nickname PIGS (for Portgual, Italy, Greece, and Spain). But after EMU, those bonds converged to yield nearly the same as the Germans.

Convergence is over and divergence seems to be the new trend, but this time Ireland has replaced Italy as one of the PIGS. Their bonds are traded at heavy discounts according to the Irish Independent:

Irish Government bonds have widened considerably in recent days amid growing speculation the State may have to invest, or underwrite an equity raising, in the country’s lenders.

Ireland’s 10-year bonds have moved from 4.48pc to 4.66pc within the past week, compared to 3.77pc for the German equivalent. They have become more expensive than the 4.64pc yields of Portugal, though remain below those of Italy (4.97pc) and Greece (5.33pc).
-Irish Independent

Needless to say this is the kind of statistic that has Eurosceptics like Ambrose Evans-Pritchard foaming at the mouth and plotting the demise of the Euro.

Source
Our banks need to be recapitalised at once, says top businessman – Irish Independent

avatar About Edward Harrison

Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty years of business experience. He is also a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages, a skill he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.

Related Posts
More About: , ,