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David Prosser: Ireland gets bond issue away, but at a price

Wednesday 22 September 2010 00:00 BST
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Outlook At first sight, the ease with which Ireland got its €1.5bn (£1.27bn) bond issue away yesterday should prompt sympathy for those in the country who have become crosser in recent days about speculation its finances are not sustainable.

One can see their point. The latest round of angst was prompted simply by an analyst's note last week, which the Government and the Central Bank of Ireland have both rejected. Nothing material seems to have changed over the past month.

Still, just look at the yields on Irish sovereign debt right now. At 6 per cent plus on longer-term debt, investors in Ireland are demanding interest payments of around four percentage points more than they charge for buying German bonds. Indeed, the yields are broadly equivalent to what Ireland would have to pay were it ever to have to go cap in hand to the new Eurozone rescue fund. Not quite such a vote of confidence then.

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