The yield on Irish 10-year bonds closed at 7.65 (7.65 per cent) basis points, while the extra yield investors demand to hold the debt instead of the benchmark German bunds reached 526 basis points.
The yield hit 7.68 per cent earlier today.
The cost of insuring Irish sovereign debt against default rose to an all-time high yesterday as credit default swaps on AIB’s subordinated debt signalled a 63 per cent probability of default within five years.
The higher cost of borrowing by the State reflects mounting concerns that Ireland will struggle to reduce its budget deficit.
It also coincided with a push by Germany to make bondholders pay towards any future bailout of a euro zone state.
The spread on Irish bonds has doubled in the past three months as the Government tries to cut the deficit in the face of a bank bailout cost that could reach €59 billion.
The turmoil on bond markets spilled over into the Iseq index yesterday, where banking shares were once again brought down by the uncertainty surrounding the fiscal position of Ireland.