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Virginia Mayo/AP
Bailout Republic?

EC assurance over bailout does little to soothe bonds

The price of government borrowing remains close to its all time record despite Olli Rehn’s assurance about funding.

THE ASSURANCES from Europe’s economics commissioner Olli Rehn that Ireland will not need to seek a financial bailout from the European Central Bank or the International Monetary Fund have done little to ease the fears of international investors, with the price of government borrowing still trading just off its record high.

Ten-year bonds are currently floating just above yesterday’s close, trading at 6.75% as of 1:20pm this afternoon, with the yields on eight- and six-year bonds also moderately up this lunchtime.

The price of two- and four-year government bonds, however, are down moderately – though the prices still hover close to their own highs from earlier in the week.

The spread between Irish and German bonds stood at 449bps.

The markets, therefore, have given little creedance to Olli Rehn’s insistence that Ireland will be able to solve its financial problems alone, though he advised that Brian Lenihan set out the savings intended in the budget as quickly as possible.

The activity may be fuelled by the report last night from the Financial Times (password needed) which suggested that the government was preparing to announce an extra €5bn in capitalisation for Anglo Irish Bank when it announces the final bill for bailout out the troubled institution tomorrow.