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Irish bonds suffer on Anglo 'haircut' report

Second transfer of loans to NAMA puts pressure on cost of Ireland’s borrowings.

REPORTS THAT ANGLO Irish Bank may be about to transfer its second tranche of loans to NAMA at a significant discount have triggered a jump in the cost of Ireland’s loans.

Reuters is reporting that Anglo is looking at a 61% ‘haircut’ on the bank’s €7bn loan transfer.

An official statement on the sale and the discount involved is expected today or tomorrow.

Fears over the rising cost of bailing out Anglo have pushed up the cost of the nation’s debts, as investors demand to hold 10-year Irish bonds over German benchmarks.

The Financial Times warns that the bond-yield spread is heading towards high levels last seen in May.

Last week, the governor of the Central Bank, Patrick Honohan, said that Anglo would end up costing taxpayers €25bn, or 20% of GDP. He said that the bailout was “costly but manageable.”

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The bank’s first batch of €10bn in loans transferred to NAMA was given a 55% discount. The second transfer was due on 19 July, but missed the deadline by over a month.

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