THERE’S SOME GOOD NEWS for Ireland on the world’s bond markets this afternoon, as the price of borrowing for the government falls below the 8% barrier despite ongoing confusion about whether Ireland will seek a bailout from overseas.

The price of ten-year bonds, as of 3:30pm this afternoon, had fallen to 7.984% – still significantly high and a cause for concern, but also notably lower than the 8.9% mark being hit last Thursday, and than today’s opening price of 8.141%.

The price of shorter-term borrowing has also taken a significant nosedive, with two-year bonds down from almost 6% to 5.377%, and four-year bonds falling to just above the 7.5% mark.

The fall in Irish ten-year bonds, and a moderate rise in the benchmark rate of Germany, has seen the spread between the two countries to 5.42% – again an extremely high spread, but lower than the 6.5% being recorded towards the end of last week.

Markit News, meanwhile, reports that the cost of purchasing insurance against an Irish default – through an investment known as a ‘credit default swap’ – has fallen to 4.9%, having stood at 5.4% when trading opened.

This equates to a market estimation that there is a 29% chance Ireland will default in the coming five years, down from 34% in the middle of last week when the cost of a CDS stood at 6%.

Whether the yield demanded of Irish bonds has fallen because investors do not fear a default, or because they believe Ireland is on the verge of tapping into international rescue funds in order to avoid one, remains to be seen.

The government will be hoping that the bond yields will be returning to a more sustainable rate before next Spring, when the government will have to return to the open bond market. Currently, the National Treasury Management Agency – the entity which issues bonds on Ireland’s behalf – has retained enough cash to fund the state until the middle of 2011.

When Ireland last issued ten-year bonds in August, the average yield was 5.386%.