News of the unrest and the High Court’s ruling that the government should not impede the holding of the Donegal South-West bye-election coincided with the cost of government borrowing rising to yet another all-time record.
Interest rates stood at 7.458% at 5pm today as markets closed - up by a sixth of a percentage point on today’s opening value, and almost a full 1.5% higher than their closing value on October 18, just 16 days ago.
The increase in the Irish price sent the benchmark measurement of the value of Irish bonds – the additional expense of lending for the Irish government to that of the German one – to past 5% for the first time, standing at 5.04% as of 5pm.
The price of eight-year bonds had crept toward 7% as the markets closed, finishing at 6.969%, while six-year bonds finished at 6.418%. Four-year paper approached 6%, closing at 5.924%, with two-year borrowing costing 4.3%.
The price of ‘credit default swaps’ also hit new records, reaching 5.6% late this afternoon – meaning that holders of €1m in Irish debt would have to pay €56,000 to insure themselves against the risk of default.
Statistically this rate means that the markets believe there to be a 31% chance that Ireland will now default on its debt obligations in the next five years.
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