Monday, October 5, 2009

Cost of protecting Irish debt drops and Irish Bond spread narrows in wake of Lisbon

The cost of protecting Irish government debt and the Irish bond spread fell today on the first day of trading after the overwhealming vote in favour of the Lisbon Treaty.

The NO side said that Lisbon would not improve Ireland's financial position who do you believe now?

LONDON, Oct 5 (Reuters) - The Irish 10-year government bond yield spread over euro zone benchmark German Bunds tightened by 6 basis points on Monday, while the cost of protecting Irish debt against default dropped.

Meanwhile, the 10-year Greek government bond yield spread over Bunds also narrowed by 6 basis points.

These moves followed Irish voters endorsement of the European Union's Lisbon Treaty and a widely-expected change of government following Greek elections at the weekend.

Five-year credit default swaps (CDS) on Irish government debt contracted to 130.5 basis points from 138.5 bps on Friday, according to credit monitor from CMA DataVision.

It means the cost falls to 130,500 euros to protect 10 million euros-worth of Irish government bonds .

The 10-year Irish/Bund spread was last seen at 159 bps, retaining their position as the euro zone's highest-yielding sovereign debt, according to Reuters data.

The equivalent Greek spread
was last seen at 129 bps, the third highest-yielding after Slovak bonds.

The Irish and Greek yield spreads led other intra euro zone spreads to narrow.

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