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Dublin: 12 °C Sunday 5 July, 2020

Borrowing costs continue upward spiral amid IMF fears

The cost of borrowing for Ireland goes over 7% again, as investors buy into Colm McCarthy’s fears of an IMF bailout.

IT’S THE SAME old story almost every day, now, isn’t it?

The cost of borrowing for the Irish government is just off its all-time high this morning, with the government having to pay 7.051% in annual interest every year, as of noon today.

That rate was up by 0.133% – a significant amount – on the morning’s closing price, meaning a relative increase of 1.92%.

The increase in Irish prices has driven the spread between the cost of borrowing for the Irish and German governments to a new record of 4.58%, or 458 ‘basis points’.

By comparison, on October 18 – just two weeks ago today – that spread had fallen to 3.62%.

Eight-year bonds also broke a significant ceiling – of 6.5% – to stand at 6.554%, while six-year bonds stood at 5.988%, also an all-time record, and just short of a major 6% landmark.

The Financial Times’ Alphaville blog believes the investor panic is as a result of the influential opinion of UCD economist Colm McCarthy, who on Sunday wrote that the “game was up” and that the prospect of requiring a budget bailout from the IMF was “at our door”.

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About the author:

Gavan Reilly

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