Ireland has recently bond yields at record highs, the market in need of international assistance to the country and the debt crisis may break out again in Europe concerns rose sharply. Data show that the Irish banking sector bond credit default swaps (CDS) 10 日 rocketed to a level equivalent to the bankrupt company, the Irish government bonds and German government bonds spreads are a new record high.

Affected by this, the euro is facing load-bearing assets sold. 11 European morning trading, the major stock markets fell across the board. Day of the European trading session, the euro also fell against major currencies, including the exchange rate against the pound sterling fell to a six-week low.

Irish Banking precarious

Fears in the market, overshadowed by the Irish banking sector credit default swaps (CDS) 10 rose dramatically Saturday, CDS prices are generally expected with the default proportional.

Bank of Ireland, Allied Irish Bank’s second-largest bond credit default swaps (CDS) 10 day of gains of 2 percentage points, prepaid costs increased to 55.7%, the cost of annual payments into a 5%. It also means that to buy the bank 10 million euros of bonds 5 year credit default protection, must pay 5.57 million euros, after a year pay 50 million euros. In addition, Ireland’s largest banks – Bank of Ireland bond credit default swaps 10, also rose 2.5 percentage points, increased to 31% of the upfront costs, pay the cost of 5% per year.

Central Bank of Ireland 10 Patrick Haw Han Snow said he was confident that Ireland will be able to return to the bond market next year, the Irish government is to strengthen fiscal austerity measures to reduce the budget deficit and restore investor confidence. IMF10 said Tuesday, the Irish over the next four years, reduction of 15 billion euros in the budget deficit, the plan of the Government’s commitment to fiscal consolidation. However, this has led the market in the country will receive IMF assistance may concern, exacerbated the market panic.

However, IMF spokesman said 10 days, Ireland is not required to IMF financial assistance. EU Commission President Jose Manuel Barroso also called on the 11th, if necessary, the European Union have the ability to take action to support Ireland. Analysts “credit line of sight” Bank Credit Analyst Simon Adamson said, “Now the market’s concerns seem to focus on Ireland and the country’s banking sector, the situation seems to have all the bad Irish.”

This year, the two banks of Ireland and Allied Irish Banks Bank of Ireland has trouble. Ireland’s oldest non-bank financial institutions in the Irish Nationwide Building Society taken over by the government earlier this year. Professor of Economics has always been more pessimistic, said Kelly Morgan, the Irish mortgage defaults in serious condition and may lead to the Irish government increased the cost to bail out banks to 700 billion euros, higher than the government’s original estimate of 500 million euros.

“Problem countries” were also affected

Poor by the banking industry, “health” of the troubled, 10, has emerged the Irish government bonds fell. Day, the Irish 10-year yield rose 67 basis points to 8.76%, of such bonds and German government bonds yield spread hit a record high of 622 basis points. Yields and bond prices are usually inversely proportional, which means that investors have confidence in Irish government bonds are gradually lost.

Affected by this, some worrying financial situation of the same European government bonds spread over comparable German government bonds widened substantially the same day. Among them, the Portuguese 10-year yield rose 26 basis points to 7.17%, Portuguese 10-year Treasury bonds over comparable German yield spread hit 484 basis points about a new high. Greece and Spain’s government bonds have also dropped.

Outside the euro zone because of concerns about the economic health of countries growing, foreign investors reduced holdings of government bonds in these countries. Citigroup, the World Bank and Eurostat data in a study that the second quarter of this year, foreign banks and institutions of Greek government bonds held by 14%, Portugal, Spain and Ireland were reduced 12%, 8% and 5%. The end of the second quarter of this year, Portugal and Ireland, the proportion of bonds held by foreign investors in 2009 declined 85% to 65%. The same period, Greece and Spain, respectively, and 43% from 70% down to 55% and 38%.

This volatile situation even alerted the London clearing house LCH. LCH said on its website, starting from the 11th of this month the Irish government bonds for an additional charge of 15% trading margin. “Margin increase, affecting not only the Irish,” fixed-income strategist at Commerzbank in charge, said Christoph Rieger, of “Portugal, Greece, Spain is also affected to some extent affected.”

If you pass the “EU financial stability mechanism (EFSF)” Aid Ireland and Portugal, the market can solve the current tensions would not lead to the spread the situation worse. Goldman Sachs chief interest rate strategist Francesco Gaizharuili 10 released the report, Ireland and Portugal are increasingly likely to accept EFSF investment, the International Monetary Fund’s financial assistance programs designed.

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