Irish yields collapse following deal

darkman2 · 29-06-2012 10:58AM #1

9 year (Irish bond)

http://www.bloomberg.com/quote/GIGB9YR:IND/chart

(2 year Irish bond)

http://www.bloomberg.com/quote/GIGB2YR:IND/chart

wow! That is a huge fall in a matter of hours. Impressive. Very good news. Let's hope it is not temporary.

christmas2012 · 29-06-2012 11:12AM

were fvcked according to 'experts' we are not going to get out of this for another 20 + years

BKtje · 29-06-2012 11:26AM

Which experts? How can they already have calculated how last nights event will effect Ireland for the next twenty year when the agreements haven't even been finalised yet or do you mean before the agreement? If it's the later their findings would be fairly useless with such a large (possible) change on the horizon for the EU.

NIMAN · 29-06-2012 11:51AM

The same experts that said the Euro had 10 days left, about 3 months ago.

Doesn't matter if the in-and-outs are worked out yet, won't stop the doom and gloom merchants coming on the media peddling their end of the world stuff. Don't forget, as a nation, we love misery, so people will lap it up.

books4sale · 29-06-2012 12:02PM

NIMAN wrote: »

The same experts that said the Euro had 10 days left, about 3 months ago.
.

...they peddled that sh*te for about 2 years.

There was a time in Boards here where every week a poster would start a new thread about how inevitable the collapse of the Euro was.:pac:

darkman2 · 29-06-2012 12:31PM

9 year Irish bond now at 6.4%. That is a low for this crisis. It has also meant it is now more expensive for Spain to borrow than Ireland. Not hard to see by market reaction what country has most to gain by implementing this deal. Our yields have fallen more than any other Eurozone country.

It's positive but we have a very long way to go. Given the position we are in as a country I am happy with what happened this morning. It only helps us get out of this situation.

AllGunsBlazing · 29-06-2012 02:41PM

I wouldn't trust the bond markets any further than I could throw them at the minute. The Spanish ten year yield alone has been up and down like a prostitute's knickers this past few weeks.

But if the 9 year Irish yield is still around 6% by the end of the summer then we can say that a corner has finally been turned. :fingers crossed:

Remember, all it takes is for Merkel to open her gob with one negative comment for yields to soar and markets to tumble all over again.

[Jackass] · 29-06-2012 02:44PM

We've heard "turned the corner" a few times, but I genuinely believe this to be it.

There's always an exaggerated reaction to significant news, positive or otherwise, and this negotiation with Europe will be dragged out over a number of months, so I wouldn't be surprised to see them rise slightly again, but the main point is that we have the "muscle" behind us now of 2 of the big 5 eurozone countries making demands that can't be ignored, and has put us on level pegging now, so it seems certain that we will get a reduction and much more favorable terms, and most importantly, the Governments spread sheet will be free of a much larger burden, paving the way for more flexibility in expenditure, definitely less austerity, and hopefully the implementation of some stimulus expenditure.

All in all, this is the news we've been waiting for. The deal hasn't been done yet, but we're now firmly sitting at the front of the table, and we've got the backing to get a fair deal and I think it puts us in a position where real incentives can be given for further integration and as I've said many times, it's all in time for Europe now. Half arsed measures haven't worked, and when it's at its weakest, the states need to become the tightest, and much closer integration of Europe will be a massively positive thing in the long run imo. Essentially becoming more at the heart of something much bigger than we could ever aspire to be on our own.

Heads the ball · 29-06-2012 02:53PM

[Jackass] wrote: »

We've heard "turned the corner" a few times, but I genuinely believe this to be it.

There's always an exaggerated reaction to significant news, positive or otherwise, and this negotiation with Europe will be dragged out over a number of months, so I wouldn't be surprised to see them rise slightly again, but the main point is that we have the "muscle" behind us now of 2 of the big 5 eurozone countries making demands that can't be ignored, and has put us on level pegging now, so it seems certain that we will get a reduction and much more favorable terms, and most importantly, the Governments spread sheet will be free of a much larger burden, paving the way for more flexibility in expenditure, definitely less austerity, and hopefully the implementation of some stimulus expenditure.

All in all, this is the news we've been waiting for. The deal hasn't been done yet, but we're now firmly sitting at the front of the table, and we've got the backing to get a fair deal and I think it puts us in a position where real incentives can be given for further integration and as I've said many times, it's all in time for Europe now. Half arsed measures haven't worked, and when it's at its weakest, the states need to become the tightest, and much closer integration of Europe will be a massively positive thing in the long run imo. Essentially becoming more at the heart of something much bigger than we could ever aspire to be on our own.

We are f*cked. We're gonna have to pay €1bn-€11bn under the ESM treaty to bail out European banks.

antoobrien · 29-06-2012 03:34PM

Heads the ball wrote: »

We are f*cked. We're gonna have to pay €1bn-€11bn under the ESM treaty to bail out European banks.

So we pay up to €11bn to get up to €40 bn off the books.....

Where do we sign up?

Slozer · 29-06-2012 03:37PM

Another piece of creative accounting to brush the problem under the carpet. (For the time being).

Heads the ball · 29-06-2012 03:47PM

antoobrien wrote: »

So we pay up to €11bn to get up to €40 bn off the books.....

Where do we sign up?

This represents a complete lack of understanding of what is going on.

We may get some money off our national debt as it is instead put back onto the banks (where it always belonged) - but hey guess who owns the banks!

antoobrien · 29-06-2012 03:57PM

Heads the ball wrote: »

This represents a complete lack of understanding of what is going on.

If we get €40 bn off GGD it reduces the debt ratio to 77% from its current level of 107%. Forget about the lower interest payments for the exchequer, it means lower levels of adjustments required to reduce the ratio toward the 60% limit (17% of an adjustment of debt/gdp rather than 47%).

Heads the ball wrote: »

We may get some money off our national debt as it is instead put back onto the banks (where it always belonged) - but hey guess who owns the banks!

Indeed, who owns the banks? Who gets the dividends if/when the banks get back to profitability? I swear some people are just looking for negatives.

flynnlives · 29-06-2012 04:03PM

here, lets not get ahead of ourselves.

still havent seen anything of the small print of this deal yet.

poeticseraphim · 29-06-2012 04:16PM

WOW!

That is impressive.....

However the devil is in the detail of any deal.

As said ....it is if this holds...great news

Goldman sachs have apparrantly been telling people to buy Spanish Irish and Italian bonds....

NIMAN · 29-06-2012 04:30PM

The amount they are letting us off with is probably going to end up being peanuts compared to what Spain and Italy is going to cost Europe.

We had a terrible banking crisis blown out of all proportions by property lending. Spain has a big property lending issue too, and the figures we are seeing now initially are probably the tip of the iceberg, just like they were in Ireland.

By the time Spain's costs are added up, we will be so small it will be the least of Europes problems.

Sand · 29-06-2012 08:52PM

Guys - when you hear Merkel telling the German people "We are going to pay off the debts of the Irish, Spanish, Italians and Greeks" then there will be a deal.

Right now, what we are hearing is the Irish, Spanish, Italians and Greeks telling the Irish, Spanish, Italians and Greeks that the Germans are going to pay off our debt. Minor, minor difference. Every EU political summit has to deliver a successful "deal" at its end. This EU summit has delivered a successful "deal" too.

And as I told people back in 2011 when there was similar hoopla about the crisis being solved - the devil is in the detail.

Who exactly has agreed to pay off all the Irish/Spanish/Italian debt?

Oh.... wasn't that in the deal?

darkman2 · 29-06-2012 09:18PM

Who is saying Irish, Spanish, Italian debt is going to be paid off?

Nobody has said that.

Sand · 29-06-2012 10:39PM

That's my point.

darkman2 · 29-06-2012 11:07PM

Sand wrote: »

That's my point.

Why should our debts be paid off? You think other countries owe us a living?

The issue here is the removal of bank debt from the sovereign. Our sovereign debt once that is done is 100% our problem that we alone have to deal with.

Duggys Housemate · 29-06-2012 11:17PM

I really get the impression that the negative guys on this thread have no idea what is going on.

Sand · 29-06-2012 11:57PM

darkman2 wrote: »

Why should our debts be paid off? You think other countries owe us a living?

The issue here is the removal of bank debt from the sovereign. Our sovereign debt once that is done is 100% our problem that we alone have to deal with.

Dial it back there a notch. Absolutely not to answer your question.

The bank debt is "our" debt. There is no such thing left as "bank" debt. This split between bank debt and sovereign debt that you imagine is mostly imagined - as Scofflaw pointed out not so long ago the practically all of the bank bailouts were funded from the NPRF and promissory notes. All of that is either spent out of sovereign reserves or sovereign debt.

The question remains - who exactly has agreed to compensate the Irish sovereign for all the sovereign wealth expended on the Irish banks?

The answer quite simply is nobody.

Debtocracy · 29-06-2012 11:58PM

This step is important in preventing a collapse of credit in the euro area and should allow us to maintain a stable state of stagflation for the next few years. What I’m wondering is who will eventually bail out the ESM when the zombie banks fail to pay back their investment?

sock puppet · 30-06-2012 12:03AM

Debtocracy wrote: »

This step is important in preventing a collapse of credit in the euro area and should allow us to maintain a stable state of stagflation for the next few years. What I’m wondering is who will eventually bail out the ESM when the zombie banks fail to pay back their investment?

What makes you think we're in a state of stagflation?

Duggys Housemate · 30-06-2012 12:06AM

Sand wrote: »

Dial it back there a notch. Absolutely not to answer your question.

The bank debt is "our" debt. There is no such thing left as "bank" debt. This split between bank debt and sovereign debt that you imagine is mostly imagined - as Scofflaw pointed out not so long ago the practically all of the bank bailouts were funded from the NPRF and promissory notes. All of that is either spent out of sovereign reserves or sovereign debt.

The question remains - who exactly has agreed to compensate the Irish sovereign for all the sovereign wealth expended on the Irish banks?

The answer quite simply is nobody.

Presumably if Spain gets a deal, we do. So we are reimbursed for that money by Europe. They take the promissory notes of our hand and pay their funny - printed - money.

darkman2 · 30-06-2012 12:08AM

Financial Times puts it better than anyone in a couple of lines

Spot the eurozone country that doesn’t actually have to issue bonds in these closing 5-year bond yields on Friday:

Spain 5.4 per cent

Italy 5.16 per cent

Ireland 5.02 per cent

darkman2 · 30-06-2012 12:26AM

Sand wrote: »

Dial it back there a notch. Absolutely not to answer your question.

The answer quite simply is nobody.

The market believes this will be applied retroactively. The statement from the commission clearly states that all are going to be treated equally. That's the reason Irish bonds are outperforming Spanish and Italian bonds - not only does the market believe this will happen - it sees Ireland in particular benefiting most from the deal as a programme country.

Look, don't take my word. Market reaction is there to see.

Scofflaw · 30-06-2012 12:57AM

Heads the ball wrote: »

This represents a complete lack of understanding of what is going on.

We may get some money off our national debt as it is instead put back onto the banks (where it always belonged) - but hey guess who owns the banks!

The answer seems likely to be that if the ESM pays for them, the ESM will own them. And that's actually a pretty good thing, given there are still risks to the banks - they're capitalised for what the mortgage default shock may be, but the estimates of the size of that could be too conservative.

I can't help but wonder, though, whether the idea of the ESM owning the "Irish" banks is something the government would be happy with, and what price we'd actually get for them. I somehow doubt it would be as much as we've put into them.

cordially,
Scofflaw

AllGunsBlazing · 30-06-2012 01:00AM

Duggys Housemate wrote: »

I really get the impression that the negative guys on this thread have no idea what is going on.

There is a difference between being negative and justifiably cautious. The euro crisis was supposed to have ended with the mass injection of money into the banks last December. It stabilised Spanish and Italian bonds for about 6 months before it all kicked off again.

I for one hope this deal goes through, as it will remove a massive millstone that hangs around our country's neck. But Merkel first has to sell it to the German people or it will die on the vine.

poeticseraphim · 30-06-2012 01:16AM

AllGunsBlazing wrote: »

There is a difference between being negative and justifiably cautious. The euro crisis was supposed to have ended with the mass injection of money into the banks last December. It stabilised Spanish and Italian bonds for about 6 months before it all kicked off again.

I for one hope this deal goes through, as it will remove a massive millstone that hangs around our country's neck. But Merkel first has to sell it to the German people or it will die on the vine.

The German parliment has approved it.....
http://www.reuters.com/article/2012/06/29/us-eurozone-germany-vote-idUSBRE85S1KR20120629
http://www.chicagotribune.com/news/sns-rt-us-eurozone-germany-votebre85s1kr-20120629,0,4220837.story

With a strong majority...

AllGunsBlazing · 30-06-2012 01:29AM

poeticseraphim wrote: »

The German parliment has approved it.....
http://www.reuters.com/article/2012/06/29/us-eurozone-germany-vote-idUSBRE85S1KR20120629
http://www.chicagotribune.com/news/sns-rt-us-eurozone-germany-votebre85s1kr-20120629,0,4220837.story

With a strong majority...

Those headlines come with a bit of a caveat though. And it doesn't necessarily mean resounding support form the German people.

Irish yields collapse following deal

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