Irish bond yields hovered around 8 per cent today and German 10-year bund yields were near the highest in almost four months after Ireland sought aid from the European Union and International Monetary Fund to shore up its finances.
The yield on the benchmark 10-year bond was 8.098 per cent at 4.05pm, down 0.02 per cent. The spread to the bund was 544.7 basis points.
The nation will pass some of the money to its banks through a "contingent" capital fund, with the rest helping the government avoid having to sell bonds, Minister for Finance Brian Lenihan told reporters late yesterday.
"This look to be enough to allay market concerns and removes imminent default risk," said Charles Diebel, head of market strategy at Lloyds TSB Corporate Markets in London. "It still leaves risk of contagion down the line but for now could ease safe-haven flows."
Moody's Investors Service analyst Dietmar Hornung said Ireland's credit rating will remain at investment grade after the government filed a request for external aid.
The focus is on policy not politics, he said.
Moody's said today in an e-mailed note that it considers a "multi-notch downgrade".
Bloomberg