BLOOMBERG TV is this afternoon reporting that the European Central Bank was forced to step in yet again earlier today, buying up Irish government bonds as the price of borrowing reached yet another all-time record.
The price of 10-year bond government bonds closed at 6.726% today – a full percentage point higher than their rate a month ago – having peaked at 6.784% shortly after 9:30am this morning.
Prices rocketed shortly after 9%, as news emerged of a revised estimate from Standard & Poor’s estimating that the final price of the government’s intervention in Anglo Irish Bank would reach €35bn – a figure many investors felt was one that Ireland can simply not afford.
Four-year bonds closed at 5.61%, up from 5.288%; while eight-year bonds also crept closer to the crucial 6.5% benchmark by closing at 6.472%.
The price of insuring against an Irish default also rocketed to 5.215% – more than double the same price two months ago – meaning that the markets expect there to be a 31% chance that Ireland will have to back out on repaying its debts.
The cost of insuring against Anglo, meanwhile, briefly reached 9.605% – implying a 58% chance of default.
Micheal Martin, who earlier addressed the general assembly of the United Nations, later spoke to Bloomberg TV in an attempt to calm investors’ fears over the notion that the government could soon collapse.
Securities analysts Evolution, meanwhile, has said that Brian Lenihan may have to reexamine his view that allowing Anglo to default on its subordinated debt was “unthinkable”.
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