Bond hit a warning sign for bailout exit

BoyRacer · June 12, 2013, 1:21pm

Bond hit a warning sign for bailout exit -Cliff Taylor → businesspost.ie/#!story/Home … 9321567117

What does this all mean for Ireland? First off it means that our exit from the bailout cannot be guaranteed and looks riskier now than a few weeks ago. Bond yields are still at reasonable levels, but the worry now is that the EU bond market enters into a negative spiral, amid fears that countries cannot sustainably fund themselves at higher rates.

Second, the news is also not good for our financial sector. Bank of Ireland got away the first unsecured, un-guaranteed bond by an Irish bank a couple of weeks ago, raising €500 million. The money was raised at 2.75 per cent - so the funding it locked in at this rate for the bank. However the investors are down on paper, as the price of the bond has fallen and its yield is now up to over 3.7 per cent. This will make further issues of such bonds unlikely in the short term, limiting the funding options for our banks.

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